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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended DECEMBER 31, 1999 or
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[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _____________ to
_____________
COMMISSION FILE NUMBER..............................................1-12989
SUNGARD/(R)/ DATA SYSTEMS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0267091
(State of incorporation) (I.R.S. Employer Identification No.)
1285 DRUMMERS LANE, WAYNE, PENNSYLVANIA 19087
(Address of principal executive offices, including zip code)
(610) 341-8700
(Telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK, PAR VALUE $0.01 PER SHARE
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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The aggregate market value of the registrant's voting stock held by non-
affiliates of the registrant as of March 17, 2000 was $4,846,000,000.(1) There
were 131,261,000 shares of the registrant's Common Stock outstanding as of March
17, 2000.
Parts II and IV of this Form 10-K incorporate by reference certain information
from the registrant's annual report to stockholders for the fiscal year ended
December 31, 1999, and Part III of this Form 10-K incorporates by reference
certain information from the registrant's definitive proxy statement, for its
2000 annual meeting of stockholders, filed with the Securities and Exchange
Commission not later than 120 days after the end of the registrant's fiscal year
covered by this report.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in the definitive proxy statement
incorporated by reference into Part III of this Form 10-K. [ ]
(1) This equals the number of outstanding shares of the registrant's Common
Stock, reduced by the number of shares that may be deemed beneficially owned
by the registrant's directors, nominees and executive officers, multiplied
by the closing price of the registrant's Common Stock reported on March 17,
2000. This information is provided solely for record keeping purposes of the
Securities and Exchange Commission and shall not be construed as an
admission that any of the registrant's directors, nominees or executive
officers is an affiliate of the registrant or is the beneficial owner of any
such shares. Any such inference is hereby disclaimed.
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TABLE OF CONTENTS
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PART I
PAGE
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ITEM 1. BUSINESS............................................................................................. 1
Overview......................................................................................... 1
Investment Considerations........................................................................ 1
Investment Support Systems....................................................................... 4
Business Continuity and Internet Services........................................................ 7
Other Businesses................................................................................. 8
Product Development.............................................................................. 9
Acquisitions and Offerings....................................................................... 9
Competition......................................................................................11
Marketing........................................................................................12
Employees........................................................................................12
Proprietary Protection...........................................................................12
ITEM 2. PROPERTIES...........................................................................................13
ITEM 3. LEGAL PROCEEDINGS....................................................................................13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................................14
ITEM 4.1 CERTAIN EXECUTIVE OFFICERS OF THE REGISTRANT.........................................................14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS................................15
ITEM 6. SELECTED FINANCIAL DATA..............................................................................15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS................15
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...........................................16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..........................................................16
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.................16
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...................................................16
ITEM 11. EXECUTIVE COMPENSATION...............................................................................17
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.......................................17
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................................................17
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K......................................17
SIGNATURES...........................................................................................19
LIST OF EXHIBITS.....................................................................................20
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PART I
ITEM 1. BUSINESS
OVERVIEW
SunGard Data Systems Inc. ("SunGard") is a global leader in integrated
information-technology solutions and "eProcessing" for financial services.
SunGard is also the pioneer and a leading provider of high-availability
infrastructure for business continuity. With annual revenues in excess of one
billion dollars, SunGard serves more than 10,000 clients in over 50 countries,
including most of the world's largest financial services companies.
SunGard offers integrated, Web-enabled enterprise solutions for the
management, trading, processing and accounting of financial assets and offers
high-availability infrastructure, outsourcing and hosting for online and other
business-critical operations. SunGard's strategy, based on innovation,
acquisition and integration, results in a diversified revenue stream from
clients who rely upon a wide range of SunGard products and services for their
business-critical processing.
SunGard's products and services generally are delivered and supported
through individual business units that offer product-specific development and
customer support. These business units are organized into groups that focus on
like customers and facilitate product integration and multi-product sales and
implementations. SunGard's executive management team identifies synergies among
SunGard businesses to continue integrating its products and services and
pursuing additional opportunities for straight-through processing. One such
initiative is the SunGard Transaction Network, a virtual network linking
investors to brokers, brokers to exchanges, exchanges to banks, and banks to
custodians, to facilitate real-time, Internet-enabled straight-through
processing.
SunGard's diversified revenue stream is largely recurring. SunGard seeks to
maximize recurring revenues by selling its products and services under fixed-
term contracts and by emphasizing customer support, product quality and product
integration in order to establish long-term relationships with customers.
SunGard's recurring revenues accounted for approximately 81% of SunGard's total
revenues during the last three years (83% in 1999). SunGard's recurring revenues
are derived primarily from contracts for processing services, business
continuity and Internet services, professional services, software maintenance
and software and hardware rentals (see INVESTMENT CONSIDERATIONS). None of
SunGard's customers individually accounted for more than two percent of
SunGard's revenues in 1999.
SunGard, a Delaware corporation, was organized in 1982. SunGard's
executive offices are located at 1285 Drummers Lane, Wayne, Pennsylvania 19087,
and its telephone number is (610) 341-8700.
INVESTMENT CONSIDERATIONS
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE.
This Report and other SunGard communications contain forward-looking
statements made by SunGard that are subject to risks and uncertainties and that
may change at any time and differ from actual results. Forward-looking
statements include information about possible or assumed future financial
results of SunGard and usually contain words such as "believes," "intends,"
"expects," "anticipates" or similar expressions. SunGard derives most of its
forward-looking statements from its operating budgets and forecasts, which are
based upon many detailed assumptions. While SunGard believes
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that its assumptions are reasonable, it cautions that there are inherent
difficulties in predicting certain important factors such as:
. the timing and magnitude of software sales;
. the timing and scope of technological advances;
. the integration and performance of acquired businesses;
. the prospect of future acquisitions;
. the ability to attract and retain skilled personnel;
. the effect of year 2000 issues on software and services buying
decisions; and
. the overall condition of the financial services industry.
Certain of these factors are further discussed below. These factors, as
and when applicable, and those discussed below should be considered in
evaluating SunGard's forward-looking statements and any investment in SunGard's
common stock.
RISK FACTORS.
You should carefully consider the risks described below before making any
investment decision. The risks and uncertainties described below are not the
only ones facing SunGard. Additional risks and uncertainties not presently
known to SunGard or that SunGard currently deems immaterial may also impair
SunGard's business operations. If any of the following risks actually occur,
SunGard's business, financial condition or results of future operations could be
materially adversely affected. In such case, the trading price of SunGard's
common stock could decline, and you may lose all or part of your investment.
SUNGARD'S GROWTH STRATEGY DEPENDS IN PART ON ACQUISITIONS. IF SUNGARD IS
UNABLE TO ACQUIRE BUSINESSES ON FAVORABLE TERMS OR SUCCESSFULLY INTEGRATE AND
MANAGE THE BUSINESSES ACQUIRED, SUNGARD'S BUSINESS AND FINANCIAL RESULTS MAY
SUFFER.
SunGard intends to grow by expanding its existing businesses and by
acquiring similar or complementary businesses. This growth strategy is subject
to a number of risks that could adversely affect SunGard's business and
financial results, including:
. SunGard may not be able to find suitable businesses to acquire on
affordable terms;
. competition from other acquirors and stock market fluctuations may make
it more difficult for SunGard to find and complete acquisitions;
. SunGard may have to raise money in the debt or equity markets to finance
future acquisitions;
. at any given time, a large number of shares of SunGard's common stock
issued to acquire businesses may become freely tradable in the market;
and
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. changes in accounting, tax, securities or other regulations may make it
more difficult or costly for SunGard to continue to grow by acquiring
similar or complementary businesses.
The businesses acquired by SunGard may perform worse than expected or may
be more difficult to integrate and manage than expected. If that happens,
SunGard's business and financial results may suffer for a number of reasons,
including:
. SunGard may have to devote unanticipated financial and management
resources to the acquired businesses;
. SunGard may not be able to realize expected operating efficiencies or
product integration benefits; and
. SunGard may have to write off goodwill or other intangible assets if the
acquisition was accounted for as a purchase.
SUNGARD'S SUCCESS DEPENDS IN PART ON ADAPTING ITS COMPUTER SERVICES AND
SOFTWARE TO CHANGES IN TECHNOLOGY AND CHANGES IN ITS CUSTOMERS' BUSINESSES. IF
SUNGARD DOES NOT SUCCESSFULLY UPDATE ITS SOFTWARE AND SERVICES, OR IF ITS NEW
PRODUCTS OR SERVICES ARE NOT TIMELY DELIVERED OR WELL RECEIVED BY CUSTOMERS,
SUNGARD'S BUSINESS AND FINANCIAL RESULTS MAY SUFFER.
SunGard's ability to successfully update its services and software and
timely develop and deliver new products and services required by its customers
is subject to a number of risks that could adversely affect SunGard's business
and financial results, including:
. SunGard may find it difficult to update its services and software and
timely develop and deliver its new products and services in a cost-
effective manner, especially when faced with rapid technological changes
that are hard to predict;
. SunGard may find it difficult to make its products work over the
Internet or to integrate its products into straight-through-processing
solutions;
. SunGard may find it difficult to update its services and software to
keep pace with business, regulatory and other developments in the
financial services industry in which most of SunGard's customers
operate; and
. new developments in patent law may make it more difficult or costly
for SunGard to add or retain important features in its software and
services.
SUNGARD'S BUSINESS IS DEPENDENT LARGELY ON THE FINANCIAL SERVICES INDUSTRY.
IF THAT INDUSTRY DOES POORLY, SUNGARD'S BUSINESS AND FINANCIAL RESULTS MAY
SUFFER.
SunGard sells most of its computer services and software to banks, mutual
funds, brokers, insurance companies and other financial services firms. If the
financial services industry or SunGard's customers in the financial services
industry experience problems, SunGard's business and financial results could be
adversely affected. For example, SunGard may suffer if securities trading
activity declines, the number or value of managed portfolios decreases, or there
is continued consolidation among firms in the financial services industry.
SUNGARD'S BUSINESS IS DEPENDENT ON SKILLED PERSONNEL. IF SUNGARD IS UNABLE
TO ATTRACT AND RETAIN SKILLED PERSONNEL, SUNGARD'S BUSINESS AND FINANCIAL
RESULTS MAY SUFFER.
SunGard's future success depends on the continued service and availability
of skilled personnel, particularly skilled technical, sales and management
personnel. Experienced personnel in the information-technology industry are in
high demand and competition for their talents is intense. There can be no
assurance that SunGard will be able to successfully attract and retain the
personnel
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that it needs. If SunGard is unable to successfully attract and retain skilled
personnel, SunGard's ability to provide its products and services may be
impeded. Even if SunGard is able to attract and retain the skilled personnel it
needs, SunGard's recruitment and compensation expenses could grow faster than
revenues, which could adversely affect SunGard's financial results.
IF CONTINUED YEAR 2000 COMPLIANCE CONCERNS NEGATIVELY IMPACT SOFTWARE AND
SERVICES BUYING DECISIONS, OR IF SUNGARD'S SIGNIFICANT THIRD-PARTY SOFTWARE AND
HARDWARE PROVIDERS DO NOT MEET CONTINUED YEAR 2000 REQUIREMENTS, SUNGARD'S
BUSINESS AND FINANCIAL RESULTS MAY SUFFER.
SunGard believes that year 2000 compliance concerns caused some decline in
software buying and conversion activity during the last half of 1999 and that
this impact may continue into the first half of 2000. As a result, SunGard's
rate of internal revenue growth may decline in the first half of 2000, as
compared to 1999, which could adversely affect SunGard's business and financial
results. Many third-party hardware, software and other products interact with
SunGard's products and services or are used by SunGard as an integral part of
its operations. Although SunGard believes that all of its important vendors are
meeting their year 2000 requirements, SunGard cannot determine at this time
whether or when year 2000 problems will arise with its third-party products. If
problems arise with third-party products, SunGard's business and financial
results may suffer.
INVESTMENT SUPPORT SYSTEMS
SunGard designs, markets and maintains a comprehensive set of proprietary
investment support systems for the financial services industry. SunGard's
customers include banks, brokers, exchanges, corporate treasury departments,
asset managers, mutual funds, investment advisers, insurance companies,
depositories, custodians, trustees, benefit plan administrators, transfer
agents, utilities, governments, educational institutions and nonprofit
organizations. The fundamental purpose of most of SunGard's investment support
systems is to automate the many detailed activities associated with trading
securities, managing portfolios and accounting for invested assets. SunGard
markets these systems throughout the United States and many systems also are
marketed worldwide.
SunGard delivers many of its investment support systems as an application
service provider, using SunGard's data centers that customers access over the
Internet or a private network. SunGard also delivers many of its investment
support systems by licensing the software to customers for use on their own
computers. SunGard provides investment support systems application services
primarily from its data centers in Birmingham (Alabama), Charlotte (North
Carolina), Fairfield (New Jersey), Hopkins (Minnesota), Ridgefield/Weehawken
(New Jersey), Voorhees (New Jersey) and Waltham (Massachusetts) (see
PROPERTIES). Contracts for investment support systems generally have initial
terms of one or more years and then continue for successive, one-year or longer
renewal terms, although some allow the customer to terminate on relatively short
notice.
SunGard's investment support systems business has continued to increase in
both size and scope, due to internal growth and acquisitions (see ACQUISITIONS
AND OFFERINGS).
BROKERAGE AND EXECUTION SYSTEMS. SunGard's brokerage and execution systems
provide comprehensive processing of securities and exchange-traded instruments
for banks and brokerages. These systems manage all important facets of
transaction processing, including order routing, execution and clearance,
position keeping and tracking, regulatory compliance and reporting, and
investment accounting and recordkeeping. SunGard also provides comprehensive
options analysis and risk management systems for professional option traders,
large banks and financial institutions. In addition, SunGard provides a service
to financial services firms that assists them with the collection, consolidation
and reporting of tax information on securities transactions. SunGard's brokerage
systems include software that enables banks and brokerages to launch Internet
trading and account services for their customers.
SunGard provides a variety of customer relationship management software.
This includes software used by retail brokers in tracking customer contacts,
managing portfolios and measuring performance, and software designed for
prospecting, client profiling, needs analysis and cross-selling for use by
insurance, banking and brokerage companies.
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SunGard's products include a wireless communications system for
straight-through processing of securities listed on the New York Stock Exchange,
which is used by SunGard's two-dollar broker to execute trades for its
institutional customers. SunGard also has an equity position in an electronic
communications network that is used by institutions and brokers to trade
anonymously and that operates using SunGard solutions (see ACQUISITIONS AND
OFFERINGS).
SunGard offers straight-through processing for equities by automatically
routing orders to a network of participating brokers. This service is marketed
to portfolio managers and independent financial advisers who use SunGard
investment support systems or third party portfolio management systems.
SunGard also offers software solutions for enterprise application
integration--known as middleware--for the financial services industry that
provide intelligent message translation, content-based routing, and data
validation and enrichment, making it easier to integrate business processes.
RISK AND DERIVATIVES SYSTEMS. SunGard provides software applications and
software development platforms that handle most aspects of risk management and
trading operations for capital markets globally. Generally, these products are
used by traders and market-makers of various types of derivative instruments,
equities, fixed income securities and foreign exchange contracts and by their
middle- and back-office operations. These front-to-back office systems provide
trading support, risk management, trade pricing and analysis, transaction
processing and accounting functions, and also assist users in determining
hedging strategies and monitoring compliance with capital requirements, trading
limits and government regulations.
SunGard also provides asset and liability management software with
comprehensive risk management and performance measurement functionality to
financial institutions.
SunGard also provides systems that permit energy companies and power
trading firms to control physical and financial trading and provide trading
support, market risk management, trade processing, power scheduling and
accounting functions.
ASSET MANAGEMENT SYSTEMS. SunGard's asset management systems maintain the
books of record for all types of large investment portfolios, such as those
managed by banks, mutual funds, employee retirement plans and insurance
companies. The primary functions of these systems are to track investment
activities such as purchases and sales, value portfolios using transmissions of
security prices and quality ratings received from various worldwide market
sources, perform complex accounting calculations and general ledger postings,
and generate a variety of accounting, audit, tax and regulatory reports. In
addition, some of these systems are used by investment advisers and
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other portfolio managers to analyze large investment portfolios using
computerized models to assist with investment strategy and management
decisions.
SunGard's investment reporting and analysis systems accept data from other
asset management systems or outside sources and perform special reporting or
analyses for fund managers and customers. Some of these systems analyze the
performance of portfolios, perform other types of investment measurement and
analysis, and produce regulatory reports for retirement plan sponsors and
participants.
SunGard offers an integrated asset management application suite that
provides straight-through processing for global asset management firms and
includes functionality for portfolio management, compliance, performance
measurement and trade order management.
SunGard also provides specialized asset management systems for bank trust
accounts. These systems automate the investment, administrative and operations
areas unique to the bank trust businesses, including cash management,
preparation of tax returns for taxable trusts, management and investment of
assets, payment of trust expenses, payment of benefits to retirees, beneficiary
distributions, customer statement production and other customer service duties.
SunGard's custody systems automate the functions associated with the
worldwide custody and safekeeping of investment assets, such as trade
settlement, investment income collection, preparation of client statements, tax
reclamation, foreign exchange and reconciliation of depository and sub-custodian
positions.
SunGard's securities lending system automates the functions associated with
worldwide securities lending activities. In addition, SunGard has entered into
an arrangement with a securities lending agent who is offering securities
lending services to SunGard's asset management systems customers.
SunGard also provides general ledger accounting systems to insurance
companies. These systems provide general ledger, budget performance and
responsibility reporting, cost accounting and profitability analysis.
SunGard also offers an online, straight-through-processing service that
automates the investment process for mutual fund transactions. This service is
marketed to users of SunGard's trust accounting, securities trading and
participant accounting systems, and for use with other vendors' software
products.
INVESTOR ACCOUNTING SYSTEMS. SunGard's participant accounting systems
automate the investment operations associated with defined-contribution
retirement plans such as 401(k) plans. These systems maintain the books of
record for each participant's share of the cash and securities in the plan,
monitor compliance with government regulations and plan restrictions, process
benefits payments to retirees, and produce tax reports for plan sponsors and
participants. As a complement to SunGard's participant accounting systems,
SunGard offers document generation systems for the creation of retirement plan
documents and forms, and software for annual government filings and returns made
by employee benefit and compensation plans.
SunGard's investor accounting systems automate the transfer agent process
for stock, bond and mutual fund issues. These systems maintain shareholder and
bondholder positions, process dividend and interest distributions, generate
proxy materials, tabulate votes, and produce tax reports and periodic
shareholder and bondholder statements.
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SunGard also provides application software systems that facilitate the
sales, marketing and administration functions of life insurance companies and
employee benefit plan administrators.
BANKING AND TREASURY SYSTEMS. SunGard's wholesale banking systems are used
for international funds transfer, trade services and cash management by
corporate and correspondent banks over the Internet or private networks, often
under a bank's private label. SunGard also provides exception-management and
report warehouse systems to financial institutions. These systems detect and
repair errors in electronic transactions, thereby preventing disruptions in
transaction processing and transmissions.
SunGard's treasury and risk management systems are used by the treasury
departments of Fortune 2000 companies and governmental entities worldwide. These
products enable the efficient management of an organization's cash, debt and
investment portfolios. SunGard also provides global professional services, which
focus on application implementation and integration for these treasury systems.
SunGard offers a Web-based service that provides a single point of access over
the Internet to enable corporate treasurers to more efficiently manage
geographically disbursed treasury operations.
PUBLIC SECTOR SYSTEMS. SunGard's public sector product offerings include
fund accounting systems for the accounting and management requirements of
educational institutions, state and local governments and other nonprofit
organizations; financial accounting, payroll and human resources systems for
local governments and school districts; and fundraising and event planning
software and information support systems for educational institutions, hospitals
and charitable institutions.
BUSINESS CONTINUITY AND INTERNET SERVICES
SunGard provides business continuity services and high-availability
infrastructure for all major computing platforms, enabling customers to have
around-the-clock access to business-critical information. SunGard also provides
Web-hosting and co-location services, as well as outsourcing and remote-access
computer services for software developers and government agencies.
Many businesses depend upon computers to perform critical tasks and use
communications networks to transmit data between computer facilities and distant
offices. As more and more business is conducted via the Internet, it is
essential for applications to remain available twenty-four-hours-a-day, seven-
days-a-week. System outages are no longer tolerated since they may result in
lost business. To address this problem, SunGard offers a comprehensive range of
business continuity services.
BUSINESS CONTINUITY. SunGard provides high-availability infrastructure for
use by customers whenever they are unable to operate or communicate with their
computer facilities. SunGard provides its high-availability infrastructure
through fully equipped and operational computer centers known as "hotsites,"
where customers may restore their critical applications using SunGard's
installed computer equipment. SunGard also provides environmentally prepared
computer centers known as "coldsites," in which customers may install and
operate their own computer equipment, and general office space equipped with
workstations and office equipment. In addition, SunGard provides mobile
resources that may be delivered or shipped directly to customer-specified
locations and electronic vaulting operations.
SunGard provides business continuity services to users of IBM (and
compatible) mainframe computers and also to users of Compaq, Data General, Dell,
Digital, Filenet, Hewlett Packard, IBM midrange (AS/400 and RS/6000), NCR,
Netframe, Prime, Pyramid, Sequent, Sequoia, Silicon Graphics, Stratus, Sun
Microsystems, Tandem and Unisys computers. These services are marketed primarily
to prospects and customers directly
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and through representatives for their mainframe and various midrange computer
installations in North America.
During 1999, for the fourteenth consecutive year, SunGard successfully
supported all customers who experienced computer-related failures.
SunGard believes that it conceived and first implemented the concept of the
MegaCenter, a multiple hotsite and coldsite facility that customers may use
directly or remotely. SunGard operates five MegaCenters, located in Atlanta,
Chicago, Philadelphia, Scottsdale (Arizona) and Warminster (Pennsylvania) (see
PROPERTIES). During 1999, SunGard expanded its Atlanta and Scottsdale
MegaCenters and completed a major expansion of its Philadelphia MegaCenter,
which SunGard believes is the world's largest commercial facility dedicated to
business continuity.
SunGard also operates MetroCenter facilities in strategic locations
throughout North America to provide work-group recovery services, enhanced
remote operations capabilities, and recovery operations and testing support for
mobile computer systems. MetroCenters are located in the United States and
Canada, including Beachwood (Ohio), Bellevue (Washington), Boston, Chicago,
Dallas, Denver, Herndon (Virginia), Jersey City (New Jersey), Los Angeles,
Montreal, Northville (Michigan), Pittsburgh, St. Louis, St. Paul, San Ramon
(California) and Toronto. The Denver, St. Paul and Toronto MetroCenters also
have coldsites that can be used in conjunction with the remote operations
capability. The recently expanded Boston location houses SunGard's MetroStor
product for data vaulting and storage.
SunGard believes that by operating a relatively small number of large
facilities linked by a comprehensive communications network it can provide
superior business continuity services in the most effective manner. The SunGard
National Network, a dedicated network linking all of SunGard's MegaCenters and
MetroCenters and many customer locations, provides customers with a nationwide
managed recovery network utilizing synchronous optical technology (SONET).
PLANNING SOLUTIONS. SunGard provides planning software and professional
consulting and educational services to develop comprehensive, business-wide
continuity plans. SunGard's contingency planning software integrates business
analysis and testing tools with automated plan development and reporting
features and offers Internet capabilities. The services performed by SunGard
include risk analyses and audits to determine exposure to the disruption of
critical operations, business and application impact analyses to prioritize
business continuity strategies, and the development of enterprise business
continuity plans. SunGard also designs testing and maintenance programs to
verify that customers' plans reflect the most current operational conditions.
eSOURCING. SunGard provides co-location, Web-hosting, Internet access,
dedicated or on-demand private network access, application service processing
accessible over the Internet or a private network, and outsourcing for
production data centers. These activities are supported at SunGard's MegaCenter
and MetroCenter facilities as well as SunGard's data centers in Voorhees and
Birmingham (see PROPERTIES). SunGard's application service processing is
provided both as an external service to customers using SunGard's investment
support sustems or third party applications, and also as an internal service to
support a number of SunGard's investment support systems business units.
OTHER BUSINESSES
SunGard provides a work-flow management system, which increases efficiency
and flexibility in managing healthcare insurance organizations, and an automated
mailing-services business.
On March 31, 1999, SunGard sold two wholly owned healthcare information
systems businesses (see ACQUISITIONS AND OFFERINGS).
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PRODUCT DEVELOPMENT
SunGard continually upgrades, enhances and expands its proprietary products
and services to meet the needs of its customers and to utilize advances in
technology (see INVESTMENT CONSIDERATIONS).
The investment support systems needs of the financial services industry are
complex and substantial, and continually evolve as a result of increased trading
volume, complexity of financial instruments, changes in laws, introductions of
new types of investment vehicles and technologies, and increased competition.
For these reasons, SunGard continually maintains, enhances and evolves its
proprietary investment support systems. SunGard expects to continue to develop
enhanced and new functionality for its products, further develop Internet and
straight-through-processing capabilities, and develop Windows 2000 and UNIX
versions of many products. During 2000, SunGard also plans to expand the number
of SunGard products that link to the SunGard Transaction Network and to pursue
other initiatives aimed at achieving SunGard's goal of enabling customers to
initiate transactions on the Web - anytime, anywhere - and to execute and record
those transactions on a real-time basis. SunGard's product development strategy
depends in part on the introduction of new technology into the established
functionality of its existing systems.
SunGard funds most of its routine ongoing software maintenance and support
activities through the software maintenance and related upgrade fees paid by its
investment support systems license customers and a portion of the monthly fees
paid by its processing customers. SunGard's expenditures for software
development during 1999, 1998 and 1997, including amounts that were capitalized,
totaled approximately $136.2 million, $137.4 million and $109.3 million,
respectively (these amounts are restated for certain poolings of interests-see
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA). These amounts do not include
routine software maintenance and support costs that are included in cost of
sales, nor do they include costs incurred in performing certain custom
development projects for individual customers in the ordinary course of
business.
SunGard expands its business continuity and Internet services by adding new
service offerings and by opening new facilities or expanding existing facilities
to accommodate both the growth in its customer base and the addition of
different types of computer systems and service offerings. SunGard expects to
open a new MetroCenter in Orlando in 2000. Also, SunGard regularly upgrades its
high-availability infrastructure to offer the most advanced computer equipment
and communications technology generally used by its customers. SunGard also
expects to expand its offerings with respect to Web-hosting, co-location and
Web-enabled outsourcing services.
ACQUISITIONS AND OFFERINGS
SunGard seeks to grow through internal development and the acquisition of
businesses that broaden or complement its existing product lines (see INVESTMENT
CONSIDERATIONS). Since its initial public offering in 1986, SunGard has acquired
91 businesses including 66 in investment support systems and 21 in business
continuity and Internet services. Also during this period, SunGard completed two
additional public offerings, a common stock offering in 1987 and a convertible
debenture offering in 1990. The debentures were converted into common stock in
1993.
During 1999, SunGard spent approximately $95.4 million in cash, net of cash
acquired, to acquire eight investment support systems businesses. In addition,
SunGard issued during 1999 a
9
<PAGE>
total of 18.8 million shares of its common stock to acquire ten investment
support systems businesses in transactions that were accounted for as poolings
of interests.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
ACQUIRED COMPANY/BUSINESS DATE ACQUIRED DESCRIPTION
===================================================================================================================
<S> <C> <C>
DollarMark Solutions, Inc. 02/02/99 Asset and liability management software for banks and other
financial institutions.
- -------------------------------------------------------------------------------------------------------------------
Sterling Wentworth Corporation 02/18/99 Rule-based selling, analysis and advisory software tools for
the financial services industry, specifically insurance,
banking and brokerage companies.
- -------------------------------------------------------------------------------------------------------------------
Annual Statement Automated 02/19/99 Statutory accounting and reporting software for
Products insurance companies.
- -------------------------------------------------------------------------------------------------------------------
Automated Securities 03/01/99 Equity order management software for brokerage firms,
Clearance, Ltd. electronic communications network for trading over-the-counter
stocks, and two-dollar broker using a wireless communications
system for trading exchange-listed securities.
- -------------------------------------------------------------------------------------------------------------------
Tiger Systems, Inc. 03/01/99 Electronic letter-of-credit automation software for banks.
- -------------------------------------------------------------------------------------------------------------------
TrueRisk Incorporated 04/14/99 Risk management applications.
- -------------------------------------------------------------------------------------------------------------------
FDP Corp. 04/28/99 Application software systems that facilitate the sales,
marketing and administration functions of life insurance
companies and employee benefit plan administrators.
- -------------------------------------------------------------------------------------------------------------------
RiskCare Limited 06/14/99 Software for trading and processing equity derivative
instruments.
- -------------------------------------------------------------------------------------------------------------------
Objective Resources Group, Inc. 06/25/99 Professional services and software development (primarily for
RiskWorks) for the energy and utilities markets.
- -------------------------------------------------------------------------------------------------------------------
Capital Financial Systems Ltd. 06/28/99 Software development and professional services for custody
products in the international marketplace.
- -------------------------------------------------------------------------------------------------------------------
RiskWorks, Inc. 06/29/99 Integrated position and risk management software for the
energy and utilities markets.
- -------------------------------------------------------------------------------------------------------------------
Oshap Technologies Ltd. 07/13/99 MINT: software solutions for enterprise application
integration.
Decalog: portfolio management, compliance, performance
measurement and trade order management software for global asset
managers.
- -------------------------------------------------------------------------------------------------------------------
Pentamation Enterprises, Inc. 08/16/99 Financial accounting, payroll and human resources software
for local governments and public school districts, and
student administrative software for school districts.
- -------------------------------------------------------------------------------------------------------------------
Exchange Market Systems E.M.S. 08/31/99 Software that enables "brick and mortar" banks and brokerages
Inc. to launch Internet trading and account services for their
customers.
- -------------------------------------------------------------------------------------------------------------------
Peak 1 Resources, Inc. 08/31/99 PC-based software for government-mandated annual filings and
returns for retirement and employee benefit plans.
- -------------------------------------------------------------------------------------------------------------------
Soft Broker AB 09/29/99 Internet-based application for trading stock and equity options
on electronic exchanges.
- -------------------------------------------------------------------------------------------------------------------
Business Systems Resources, 10/06/99 Fundraising software solutions for colleges and universities.
LLC
- -------------------------------------------------------------------------------------------------------------------
Synamic Limited's Financial 10/21/99 Collateral management software for financial institutions.
Products Division
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
ACQUIRED COMPANY/BUSINESS DATE ACQUIRED DESCRIPTION
===================================================================================================================
<S> <C> <C>
US Virtual, Inc. 02/15/00 Internet-based order entry trading application for futures and
options, and simulated brokerage application.
- -------------------------------------------------------------------------------------------------------------------
Microbank Software, Inc. 02/16/00 Exception-management software for banks.
- -------------------------------------------------------------------------------------------------------------------
Global Information Solutions 03/01/00 Treasury information systems for major corporations and banks.
Limited
- -------------------------------------------------------------------------------------------------------------------
Cassidy, Jones & Co., Inc. 03/09/00 Two-dollar broker operating on the floor of the NYSE.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
As part of the acquisition of Automated Securities Clearance, Ltd., SunGard
acquired a majority interest in The Brass Utility L.L.C. (BRUT), an electronic
communications network (ECN). In February 2000, BRUT merged with Strike
Technologies and is now known as Brut ECN LLC. SunGard's ownership in the merged
ECN is 20%. SunGard also entered into long-term contracts for processing and
clearing transactions for Brut ECN LLC.
In March 2000, SunGard purchased 7.5% of the outstanding common stock and
certain preferred stock of Netera, Inc., a provider of e-business consulting
services and technology solutions for entities that wish to do business on the
Internet.
In March 1999, SunGard sold two healthcare information systems businesses,
Intelus Corporation and Med Data Systems, Inc.
COMPETITION
Since most of SunGard's computer services and software are specialized and
technical in nature, most of the market niches in which SunGard competes have a
relatively small number of significant competitors. Some of SunGard's existing
competitors and some potential competitors have substantially greater financial,
technological and marketing resources than SunGard. SunGard believes that, for
most of its businesses, service, quality and reliability are more important
competitive factors than price.
In its investment support systems business, SunGard competes with numerous
other data processing and financial software vendors that may be broadly
categorized into two groups. One group is comprised of specialized investment
support systems companies, most of which are much smaller than SunGard. The
other group is comprised of large computer services companies whose principal
businesses are not in the investment support systems area, such as Automatic
Data Processing, Inc., Reuters Group PLC and The Thomson Corporation, all of
which are also active acquirors. SunGard also faces competition from the
internal processing and development capabilities of its customers and prospects.
The key competitive factors in marketing investment support systems are the
accuracy and timeliness of processed information provided to customers, features
and adaptability of the software, level and quality of customer support, level
of software development expertise and overall net cost. SunGard believes that
it competes effectively as to each of these factors and that its reputation and
experience in these markets are important competitive advantages.
The business continuity business is highly competitive. SunGard's
principal competitors in this business are Comdisco, Inc. and IBM Corporation.
SunGard also faces potential competition from major companies that have computer
facilities that could be made available for business
11
<PAGE>
continuity use. SunGard believes that it competes effectively as to the key
competitive factors in this market, namely quality of facilities, scope and
quality of services, level and quality of customer support, level of technical
expertise and price. SunGard also believes that its experience and reputation as
the innovator in this business are important competitive advantages.
In its new business of providing Web-hosting, co-location, Internet access
and Web-enabled outsourcing services, SunGard competes with numerous other
vendors, including specialized Web-hosting, co-location and Internet access
service providers, large computer services companies and telecommunications
companies. SunGard believes that its historical strengths in business continuity
and its significant high-availability infrastructure assets will allow SunGard
to compete effectively as to the key competitive factors in this market, namely
quality of facilities, technical expertise, network capabilities, ability to
provide customized solutions and price.
MARKETING
Most of SunGard's specialized investment support services and business
continuity services are marketed throughout the United States, and many are
marketed worldwide. SunGard's international sales during 1999, 1998 and 1997
totaled approximately $297.0 million, $314.5 million and $246.4 million,
respectively (these amounts are restated for certain poolings of interests-see
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA).
SunGard develops and maintains proprietary marketing information by
identifying prospective customers through a variety of industry contacts,
databases and other sources, and then forming business relationships with
prospects. SunGard also attempts to identify and attract customers through its
Web site and by conducting seminars and participating in industry conferences.
Customer references have been an important aid in obtaining new business.
EMPLOYEES
At December 31, 1999, SunGard had approximately 6,900 full-time employees.
SunGard believes that its success, in part, depends on its continuing ability to
attract and retain skilled technical, sales and management personnel. While
skilled personnel (particularly application processing professionals and
software developers) are in high demand and competition for their talents is
intense, and although SunGard has been experiencing an increased rate of
turnover, SunGard believes that it has been able to attract and retain highly
qualified personnel (see INVESTMENT CONSIDERATIONS). None of SunGard's employees
is covered by a collective bargaining contract. SunGard believes that its
employee relations are excellent.
PROPRIETARY PROTECTION
SunGard owns registered marks for the SUNGARD name and owns or has applied
for trademark registration for many of its products and services. SunGard relies
primarily on contractual restrictions and copyright and trade secret laws for
the protection of its proprietary services and software. SunGard also has
established policies requiring its personnel to maintain the confidentiality of
SunGard's proprietary property. Although SunGard has few registrations of its
copyrights and has no patents, SunGard is applying for software patents on a
case by case basis and will continue to monitor ongoing developments in the
evolving software patent field.
12
<PAGE>
ITEM 2. PROPERTIES
The following table indicates the location and size of SunGard's principal
computer facilities and business continuity and Internet services MegaCenters.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
LOCATION Purpose SQUARE FEET
=================================================================================================================
<S> <C> <C>
Alpharetta, GA Business continuity and Internet services MegaCenter. 60,000
(near Atlanta)
- -----------------------------------------------------------------------------------------------------------------
Birmingham, AL Asset management systems, investor accounting systems and eSourcing 50,000
data center.
- -----------------------------------------------------------------------------------------------------------------
Charlotte, NC Asset management systems data center. 40,200
- -----------------------------------------------------------------------------------------------------------------
Fairfield, NJ Asset management systems data center. 22,000
(near New York)
- -----------------------------------------------------------------------------------------------------------------
Hopkins, MN Brokerage and execution systems data center. 46,200
(near Minneapolis)
- -----------------------------------------------------------------------------------------------------------------
Northbrook, IL Business continuity and Internet services MegaCenter. 84,000
(near Chicago)
- -----------------------------------------------------------------------------------------------------------------
Philadelphia, PA Business continuity and Internet services MegaCenter. 368,600
- -----------------------------------------------------------------------------------------------------------------
Ridgefield and Weehawken, Brokerage and execution systems data centers. 5,800
NJ (near New York)
- -----------------------------------------------------------------------------------------------------------------
Scottsdale, AZ Business continuity and Internet services MegaCenter. 35,800
- -----------------------------------------------------------------------------------------------------------------
Voorhees, NJ Assets management systems, investor accounting systems and 51,000
(near Philadelphia) eSourcing data center.
- -----------------------------------------------------------------------------------------------------------------
Waltham, MA Brokerage and execution systems data center. 13,100
(near Boston)
- -----------------------------------------------------------------------------------------------------------------
Warminster, PA Business continuity and Internet services MegaCenter. 20,000
(near Philadelphia)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
SunGard leases all of its offices and facilities listed above, with the
exception of its Voorhees, Warminster and Weehawken facilities, which are owned,
and its Hopkins facility, which consists of two connected buildings, one leased
and the other owned. SunGard also owns its MetroCenters in St. Paul and
Northbrook and certain of its other offices. In addition, SunGard leases space,
primarily for sales offices, customer support offices, MetroCenters and remote
operations centers, in many locations in the United States and worldwide.
SunGard believes that its leased and owned facilities are adequate for SunGard's
present operations.
ITEM 3. LEGAL PROCEEDINGS
SunGard is presently a party to certain lawsuits arising in the ordinary
course of its business. SunGard believes that none of its current legal
proceedings will be material to its business or financial condition.
13
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 4.1 CERTAIN EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of SunGard who are not also directors are listed below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
NAME AGE PRINCIPAL POSITIONS WITH SUNGARD DATA SYSTEMS INC.
=================================================================================================================
<S> <C> <C>
Andrew P. Bronstein 41 Vice President and Controller
- -----------------------------------------------------------------------------------------------------------------
Philip L. Dowd 58 Senior Vice President
- -----------------------------------------------------------------------------------------------------------------
Robert Greifeld 42 Senior Vice President
- -----------------------------------------------------------------------------------------------------------------
Lawrence A. Gross 47 Vice President and General Counsel
- -----------------------------------------------------------------------------------------------------------------
Michael K. Muratore 53 Senior Vice President
- -----------------------------------------------------------------------------------------------------------------
Donna J. Pedrick 50 Vice President-Human Resources
- -----------------------------------------------------------------------------------------------------------------
David E. Robinson 56 Senior Vice President
- -----------------------------------------------------------------------------------------------------------------
Michael J. Ruane 46 Chief Financial Officer and Vice President-Finance
- -----------------------------------------------------------------------------------------------------------------
Richard C. Tarbox 47 Vice President-Corporate Development
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Mr. Bronstein has been Vice President and Controller of SunGard since 1994.
Before that, he was Corporate Controller since 1992. From 1985 to 1992, he was
a manager with Coopers & Lybrand L.L.P., Philadelphia, where he served as senior
manager on SunGard's account and as director of the firm's Philadelphia high
technology group. Mr. Bronstein is a director and officer of most of SunGard's
domestic subsidiaries.
Mr. Dowd has been Senior Vice President of SunGard since October 1998.
From 1990 to October 1998, Mr. Dowd was Chief Executive Officer of the SunGard
Trust and Shareholder Systems Group. He was President of SunGard Investment
Systems Inc. from 1982 to 1990. Mr. Dowd is a director and/or officer of many
of SunGard's investment support systems subsidiaries.
Mr. Greifeld has been Senior Vice President of SunGard since February 2000.
From August 1999 to February 2000, Mr. Greifeld was Vice President of SunGard,
and from May 1999 to August 1999, he was Chief Executive Officer of the SunGard
Brokerage Systems Group. From 1993 to 1999, Mr. Greifeld was President of
Automated Securities Clearance, Ltd., which was acquired by SunGard in March
1999. Mr. Greifeld is a director and/or officer of many of SunGard's investment
support systems subsidiaries.
Mr. Gross has been Vice President and General Counsel of SunGard since 1986
and Secretary of SunGard since 1987. From 1979 to 1986, he was a lawyer with
Blank, Rome, Comisky & McCauley, Philadelphia, and he has represented SunGard
since 1983. Mr. Gross is a director and officer of most of SunGard's domestic
subsidiaries and some of its foreign subsidiaries.
Mr. Muratore has been Senior Vice President of SunGard since October 1998.
From 1995 to October 1998, Mr. Muratore was Chief Executive Officer of the
SunGard Financial Systems Group, and from 1990 to 1995, he was Chief Executive
Officer of the SunGard Computer Services
14
<PAGE>
Group. From 1985 to 1990, Mr. Muratore held various senior executive positions
with SunGard. Mr. Muratore is a director and/or officer of many of SunGard's
domestic subsidiaries.
Ms. Pedrick has been Vice President-Human Resources of SunGard since 1988.
From 1983 to 1988, she was Director-Human Resources of SunGard.
Mr. Robinson has been Senior Vice President of SunGard since August 1999.
From October 1998 until August 1999, Mr. Robinson was Chief Executive Officer of
the SunGard Investment and Shareholder Systems Group. From 1983 to 1999, Mr.
Robinson held various senior executive positions with SunGard, including
President of SunGard Investment Systems Inc. from 1993 to 1999. Mr. Robinson is
a director and/or officer of many of SunGard's investment support systems
subsidiaries.
Mr. Ruane has been Chief Financial Officer, Vice President-Finance and
Treasurer of SunGard since 1994. From 1992 until 1994, Mr. Ruane was Chief
Financial Officer and Vice President-Finance of the SunGard Trading Systems
Group. Before that, he was Vice President-Controller of SunGard from 1990
through 1992, and Corporate Controller of SunGard from 1985 to 1990. Mr. Ruane
is a director and officer of most of SunGard's domestic and foreign
subsidiaries.
Mr. Tarbox has been Vice President-Corporate Development of SunGard since
1987.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
This information is incorporated by reference to the section entitled STOCK
INFORMATION in SunGard's 1999 Annual Report to Stockholders (included in Exhibit
13.1 to this Report on Form 10-K).
ITEM 6. SELECTED FINANCIAL DATA
This information is incorporated by reference to the section entitled
SELECTED FINANCIAL INFORMATION in SunGard's 1999 Annual Report to Stockholders
(included in Exhibit 13.1 to this Report on Form 10-K).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This information is incorporated by reference to the section entitled
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS in SunGard's 1999 Annual Report to Stockholders (included in Exhibit
13.1 to this Report on Form 10-K).
15
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
SunGard does not use derivative financial instruments to manage market risk
exposures or for trading or speculative purposes. SunGard invests available
cash in short-term, highly-liquid financial instruments, with a substantial
portion of such investments having initial maturities of three months or less.
While changes in interest rates could decrease SunGard's interest income,
SunGard does not consider the interest rate risk for these investments to be
material. As of December 31, 1999, SunGard also held an equity investment
interest equal to approximately 16.5% of the common stock in Tecnomatix
Technologies Ltd. (NASDAQ: TCNO), which was acquired in connection with a
pooling-of-interests transaction. The risks associated with this investment
include foreign currency risk, technology risk, and risks associated with the
public finance markets. SunGard does not believe that it has a material exposure
to the risks associated with this investment.
While approximately 21% of SunGard's 1999 revenues came from sales to
customers located outside of the United States, more than half of these sales
were U.S. dollar-denominated sales by SunGard's U.S.-based operations. For
SunGard's foreign operations, SunGard generally matches local currency revenues
with local currency costs. For these reasons, SunGard does not believe that it
has a material exposure to changes in foreign currency exchange rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of SunGard, supplementary data and related
documents that are included in this Report on Form 10-K are listed in Item
14(a), Part IV, of this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
This Part incorporates certain information from SunGard's definitive proxy
statement for its 2000 Annual Meeting of Stockholders ("2000 Proxy Statement")
filed with the Securities and Exchange Commission not later than 120 days after
the end of SunGard's fiscal year covered by this Report on Form 10-K.
Notwithstanding such incorporation, the sections of SunGard's 2000 Proxy
Statement entitled REPORT OF THE COMPENSATION COMMITTEE AND EQUITY AWARD
SUBCOMMITTEE and PERFORMANCE GRAPH shall not be deemed to be "filed" as part of
this Report.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors of SunGard is incorporated by
reference to SunGard's 2000 Proxy Statement including but not necessarily
limited to the section of such proxy statement entitled ELECTION OF DIRECTORS.
Information concerning executive officers of SunGard who are not also
directors is included in Item 4.1, Part I, of this Report on Form 10-K.
16
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference to SunGard's 2000 Proxy
Statement including but not necessarily limited to the section of such proxy
statement entitled EXECUTIVE COMPENSATION.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference to SunGard's 2000 Proxy
Statement including but not necessarily limited to the section of such proxy
statement entitled BENEFICIAL OWNERSHIP OF COMMON STOCK.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference to SunGard's 2000 Proxy
Statement including but not necessarily limited to the sections of such proxy
statement entitled EXECUTIVE COMPENSATION, BENEFICIAL OWNERSHIP OF COMMON STOCK
and ELECTION OF DIRECTORS.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS
The following financial statements of SunGard, supplementary data and
related documents are incorporated by reference to SunGard's 1999 Annual Report
to Stockholders (included in Exhibit 13.1 to this Report on Form 10-K):
Report of Independent Accountants on Financial Statements, dated February
10, 2000, except as to the subsequent events information presented in Note
2, for which the date is March 1, 2000.
Consolidated Statements of Income for each of the years ended December 31,
1999, 1998 and 1997.
Consolidated Balance Sheets as of December 31, 1999 and 1998.
Consolidated Statements of Cash Flows for each of the years ended December
31, 1999, 1998 and 1997.
Consolidated Statement of Stockholders' Equity for each of the years ended
December 31, 1999, 1998 and 1997.
Notes to Consolidated Financial Statements.
Quarterly Financial Information (unaudited).
17
<PAGE>
(a)(2) FINANCIAL STATEMENT SCHEDULES
None.
(a)(3) EXHIBITS
The Exhibits that are incorporated by reference in this Report on Form
10-K, or are filed with this Report, are listed in the LIST OF EXHIBITS
beginning on page 20 of this Report. Exhibits 10.8 through 10.22 are the
management contracts and compensatory plans and arrangements that are required
to be filed as Exhibits to this Report.
(b) REPORTS ON FORM 8-K
None.
18
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
SUNGARD DATA SYSTEMS INC.
Date: March 29, 2000 By: s/ James L. Mann
------------------------------------
JAMES L. MANN,
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT
HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND
IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
Signature Capacity Date
- --------------------------------------- ----------------------------------- --------------
<S> <C> <C>
s/ James L. Mann Chief Executive Officer and March 29, 2000
- --------------------------------------- Chairman of the Board of Directors
James L. Mann (principal executive officer)
s/ Cristobal Conde President, Chief Operating Officer March 29, 2000
- --------------------------------------- and Director
Cristobal Conde
s/ Michael J. Ruane Chief Financial Officer and March 29, 2000
- --------------------------------------- Vice President-Finance
Michael J. Ruane (principal financial officer)
s/ Andrew P. Bronstein Vice President and Controller March 29, 2000
- --------------------------------------- (principal accounting officer)
Andrew P. Bronstein
s/ Till M. Guldimann Senior Vice President, Strategy and March 29, 2000
- --------------------------------------- Director
Till M. Guldimann
s/ Gregory S. Bentley Director March 29, 2000
- ---------------------------------------
Gregory S. Bentley
s/ Michael C. Brooks Director March 29, 2000
- ---------------------------------------
Michael C. Brooks
s/ Albert A. Eisenstat Director March 29, 2000
- ---------------------------------------
Albert A. Eisenstat
s/ Bernard Goldstein Director March 29, 2000
- ---------------------------------------
Bernard Goldstein
s/ Michael Roth Director March 29, 2000
- ---------------------------------------
Michael Roth
s/ Malcolm I. Ruddock Director March 29, 2000
- ---------------------------------------
Malcolm I. Ruddock
s/ Lawrence J. Schoenberg Director March 29, 2000
- ---------------------------------------
Lawrence J. Schoenberg
</TABLE>
19
<PAGE>
LIST OF EXHIBITS
NUMBER DOCUMENT
- ------ --------
3.1/(1)/ Restated Certificate of Incorporation of SunGard.
3.2 Amended and Restated Bylaws of SunGard (filed with this Report).
4.1/(2)/ Specimen Common Stock Certificate of SunGard.
10.1/(3)/ Lease, dated April 12, 1984, between SunGard and Broad and Noble
Associates, Inc., relating to SunGard's facility at 401 North
Broad Street, Philadelphia, Pennsylvania, and Amendments
thereto, dated October 18, 1989, September 30, 1991 and November
19, 1992 ("401 Lease").
10.2/(4)/ Amendment to 401 Lease, dated October 9, 1995.
10.3/(5)/ Amendment to 401 Lease, dated December 23, 1996.
10.4/(6)/ Amendment to 401 Lease, dated March 1997.
10.5/(6)/ Amendment to 401 Lease, dated December 18, 1997.
10.6 Amendment to 401 Lease, dated June 9, 1999 (filed with this
Report).
10.7/(7)/ Credit Agreement, dated August 29, 1996, among SunGard, certain
banks and other financial institutions and PNC Bank, National
Association, as Agent.
10.8/(8)/ SunGard's 1986 Stock Option Plan, Amendments thereto, dated
January 1, 1987, November 1, 1988, February 6, 1990, November 8,
1991, February 16, 1993 and February 13, 1995, and United
Kingdom Addendum thereto, dated February 12, 1991./(13)/
10.9/(9)/ SunGard's 1988 Nonqualified Stock Option Plan and Amendment
thereto, dated October 30, 1990./(13)/
10.10/(10)/ SunGard's 1990 Amended and Restated Restricted Stock Incentive
Plan./(13)/
10.11/(11)/ SunGard's Restricted Stock Award Plan for Outside Directors.
/(13)/
10.12 Amendment No. 1 to SunGard's Restricted Stock Award Plan for
Outside Directors (filed with this Report)./(13)/
10.13/(12)/ SunGard's 1994 Equity Incentive Plan./(13)/
10.14 Amendment No. 1 to SunGard's 1994 Equity Incentive Plan (filed
with this Report)./(13)/
10.15/(4)/ SunGard's 1996 Equity Incentive Plan./(13)/
10.16/(5)/ The United Kingdom Addendum to SunGard's 1996 Equity Incentive
Plan./(13)/
20
<PAGE>
10.17 Amendment No. 1 to SunGard's 1996 Equity Incentive Plan (filed
with this Report)./(13)/
10.18/(6)/ SunGard's 1998 Equity Incentive Plan./(13)/
10.19 SunGard's 2000 Equity Incentive Plan (filed with this
Report)./(13)/
10.20 Summary Description of SunGard's Annual Executive Incentive
Compensation Program (filed with this Report)./(13)/
10.21 Summary Description of SunGard's Long-Term Executive Incentive
Compensation Plan (filed with this Report)./(13)/
10.22/(9)/ Form of Indemnification Agreement entered into by SunGard with
its directors and officers./(13)/
13.1 Portions of SunGard's Annual Report to Stockholders for the
fiscal year ended December 31, 1999 expressly incorporated
herein by reference (filed with this Report).
21.1 Subsidiaries of the Registrant (filed with this Report).
23.1 Consent of Independent Accountants regarding SunGard's
consolidated financial statements (filed with this Report).
27.1 Financial Data Schedule for the year ended December 31, 1999
(filed with this Report).
_____________
(1) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 (Commission
File No. 1-12989).
(2) Incorporated by reference to the Exhibits filed with SunGard's Registration
Statement on Form S-1 and Amendments No. 1, No. 2, and No. 3 thereto
(Registration No. 33-3181).
(3) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1992 (Commission
File No. 0-14232).
(4) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 (Commission
File No. 0-14232).
(5) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996 (Commission
File No. 0-14232).
(6) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 (Commission
File No. 1-12989).
(7) Incorporated by reference to the Exhibits filed with SunGard's Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 1996
(Commission File No. 0-14232).
(8) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994 (Commission
File No. 0-14232).
21
<PAGE>
(9) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1991 (Commission
File No. 0-14232).
(10) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1989 (Commission
File No. 0-14232).
(11) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1990 (Commission
File No. 0-14232).
(12) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993 (Commission
File No. 0-14232).
(13) Management contract or compensatory plan or arrangement.
22
<PAGE>
INDEX OF EXHIBITS FILED WITH THIS REPORT
NUMBER DOCUMENT
- ------ --------
3.2 Amended and Restated Bylaws of SunGard.
10.6 Lease Amendment to 401 Lease dated June 9, 1999.
10.12 Amendment No. 1 to SunGard's Restricted Stock Award Plan for Outside
Directors./(1)/
10.14 Amendment No. 1 to SunGard's 1994 Equity Incentive Plan./(1)/
10.17 Amendment No. 1 to SunGard's 1996 Equity Incentive Plan./(1)/
10.19 SunGard's 2000 Equity Incentive Plan./(1)/
10.20 Summary Description of SunGard's Annual Executive Incentive Compensation
Program./(1)/
10.21 Summary Description of SunGard's Long-Term Executive Incentive
Compensation Plan./(1)/
13.1 Portions of SunGard's Annual Report to Stockholders for the fiscal year
ended December 31, 1999 expressly incorporated herein by reference.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Independent Accountants regarding SunGard's consolidated
financial statements.
27.1 Financial Data Schedule for the year ended December 31, 1999.
___________
(1) Management contract or compensatory plan or arrangement.
23
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EXHIBIT 3.2
AMENDED AND RESTATED BY-LAWS
OF
SUNGARD DATA SYSTEMS INC.
(a Delaware Corporation)
ARTICLE I
OFFICES
-------
The registered office of the Corporation in the State of Delaware shall be
located in the City of Wilmington, County of New Castle. The Corporation may
establish or discontinue, from time to time, such other offices, within or
without the State of Delaware, as the Board of Directors may designate.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place of the Meetings. All meetings of stockholders shall be
held at such place or places, within or without the State of Delaware, as may
from time to time be fixed by the Board of Directors, or as shall be specified
in the respective notices, or waivers of notice, thereof.
Section 2. Annual Meeting. The annual meeting of Stockholders for the
election of Directors and the transaction of other business shall be held on
such date and at such place as may be designated by the Board of Directors. At
each annual meeting, the stockholders entitled to vote shall elect a Board of
Directors and may transact such other proper business as may come before the
meeting, irrespective of whether the notice of said meeting contains any
reference thereto, except as otherwise provided by applicable law.
Section 3. Special Meetings. A special meeting of the stockholders, or
of any class thereof entitled to vote, for any other purpose or purposes, may be
called at any time by the Board of Directors, the Chairman of the Board or the
President and shall be called by the Chairman of the Board, the President or the
Secretary upon the written request of stockholders holding of record at least
50% of the outstanding shares of stock of the Corporation entitled to vote at
such meeting. Such written request shall state the purpose or purposes for which
such meeting is to be called.
Section 4. Notice of Meetings. Except as otherwise provided by law,
written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting, shall be given not less than
ten days nor more than sixty days before the date on which the meeting is to be
held to each stockholder of record entitled to vote thereat by delivering a
notice thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended
<PAGE>
for him be directed to another address, in which case such notice shall be
directed to him at the address designated in such request. Notice shall not be
required to be given to any stockholder who shall waive such notice in writing,
whether prior to or after such meeting, or who shall attend such meeting in
person or by proxy unless such attendance is for the express purpose of
objecting, at the beginning of such meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Every notice of a
special meeting of the stockholders shall state, in addition to the place, date
and hour of the meeting, the purpose or purposes thereof.
Section 5. List of Stockholders. It shall be the duty of the Secretary or
other officer of the Corporation who shall have charge of the stock ledger to
prepare and make, at least ten days before every meeting of the stockholders, a
complete list of the stockholders entitled to vote thereat, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in his name. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting or, if not so specified, at the place
where the meeting is to be held. The list shall be kept and produced at the time
and place of the meeting during the whole time thereof and subject to inspection
of any stockholder who may be present. The original or duplicate ledger shall be
the only evidence as to who are the stockholders entitled to examine such list
or books of the Corporation or to vote in person or by proxy at such meeting.
Section 6. Quorum. At each meeting of the stockholders, the holders of
record of a majority of the issued and outstanding stock of the Corporation
entitled to vote at such meeting, present in person or by proxy, shall
constitute a quorum for the transaction of business, except where otherwise
provided by law, the Certificate of Incorporation or these By-laws. In the
absence of a quorum, any officer entitled to preside at, or act as secretary of,
such meeting shall have the power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
constituted, and thereupon, any business may be transacted at the adjourned
meeting that might have been transacted at the meeting as originally called.
Section 7. Conduct of the Meetings. The Chairman of the Board shall
preside at all meetings. In the absence of the Chairman of the Board, the
President shall preside or, in his absence, any officer designated by the Board
of Directors. The officer presiding over the meeting of stockholders may
establish such rules and regulations for the conduct of the meeting as he may
deem to be reasonably necessary or desirable for the orderly and expeditious
conduct of the meeting.
Section 8. Voting. Every stockholder of record who is entitled to vote
shall at every meeting of the stockholders be entitled to one vote for each
share of stock held by him on the record date; except, however, that shares of
its own stock belonging to the Corporation or to another corporation, if a
majority of the shares entitled to vote in the election of the directors of such
other corporation is held by the Corporation, shall neither be entitled to vote
nor counted for the quorum purposes. Nothing in this Section shall be construed
as limiting the
2
<PAGE>
right of the Corporation to vote its own stock held by it in a fiduciary
capacity. At all meetings of the stockholders at which a quorum is present, all
matters shall be decided by majority vote of the shares of the stock present in
person or by proxy and entitled to vote thereon, except as otherwise required by
law or the Certificate of Incorporation. The vote on all elections of Directors
shall be by written ballot, and upon demand of any stockholder, the vote on any
other question before the meeting shall be by ballot or otherwise as determined
by the chairman of the meeting. On a vote by written ballot, each ballot shall
be signed by the stockholder voting, or in his name by his proxy, if there be
such proxy, and shall state the number of shares voted by him and the number of
votes to which each share is entitled.
Section 9. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent to corporate action in writing without a
meeting shall have the right to do so either in person or by an agent or agents
authorized by a proxy granted in accordance with Delaware law. An agent so
appointed need not be a stockholder. No proxy shall be valid after the
expiration of three years from the date thereof unless the proxy provides for a
longer period.
Section 10. Action without a Meeting. Any action required to be taken at
any annual or special meeting of stockholders or any action which may be taken
at any annual or special meeting of stockholders may be taken without a meeting,
without prior notice and without a vote, if a consent in writing setting forth
the action so taken shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
------------------
Section 1. Powers. The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors.
Section 2. Nomination. Beginning with the annual meeting of the
stockholders to be held in 1987, nominations for directors to be elected at an
annual meeting of the stockholders must be submitted to the Secretary of the
Corporation in writing not later than the close of business on the thirtieth
calendar day immediately preceding the date of the meeting. All late nominations
shall be rejected. Notwithstanding the forgoing, at any time prior to the
election of directors at a meeting of stockholders, the Board of Directors may
designate a substitute nominee to replace any bona fide nominee who was
nominated as set forth above and who, for any reason, becomes unavailable for
election as a director.
Section 3. Election and Term. Except as otherwise provided by law,
Directors shall be elected at the annual meeting of stockholders and shall hold
office until the next annual meeting of stockholders and until their successors
are elected and qualify, or until they sooner
3
<PAGE>
die, resign or are removed. At each annual meeting of stockholders at which a
quorum is present, the persons receiving a plurality of the votes cast shall be
the Directors.
Section 4. Number. The number of Directors shall be such number as shall
be determined from time to time by the Board of Directors but shall not be less
than two nor more than ten.
Section 5. Quorum and Manner of Acting. Unless otherwise provided by
law, the presence of 50% of the whole Board of Directors shall be necessary to
constitute a quorum for the transaction of business. In the absence of a quorum,
a majority of the Directors present may adjourn the meeting from time to time
until the quorum shall be present. Notice of any adjourned meeting need not be
given. At all meetings of Directors at which a quorum is present, all matters
shall be decided by the affirmative vote of the majority of the Directors
present, except as otherwise required by law. The Board of Directors may hold
its meetings at such place or places within or without the State of Delaware as
the Board of Directors may from time to time determine or as shall be specified
in the respective notices, or waivers of notice, thereof.
Section 6. Organization Meeting. Immediately after each annual meeting of
stockholders for the election of the Directors, the Board of Directors shall
meet at the place of the annual meeting of the stockholders for the purpose of
organization, the election of officers and the transaction of other business.
Notice of such meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given as hereinafter provided for special
meetings of the Board of Directors, subject to the execution of a waiver of the
notice thereof signed by, or the attendance at such meeting of, all Directors
who may not have received such notice.
Section 7. Regular Meetings. Regular meetings of the Board of Directors
may be held, without notice, at such time and place, within or without the State
of Delaware, as shall from time to time be determined by resolution of the Board
of Directors. At such meetings, the Board of Directors may transact such
business as may be brought before the meeting.
Section 8. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the Chairman of the Board or the President or
by a majority of the Directors. Notice of each such meeting should be mailed to
each Director, addressed to him at his residence or usual place of business, at
least five days before the date on which the meeting is to be held, or shall be
sent to him at such place by telegraph, cable, radio or wireless, or be
delivered personally or by telephone, not later than the day before the day on
which such meeting is to be held. Each such notice shall state the time and
place of the meeting and, as may be required, the purposes thereof. Notice of
any meeting of the Board of Directors need not be given to any Director if he
shall sign a written waiver thereof either before or after the time stated
therein for such meeting, or if he shall be present at the meeting. Unless
limited by law, the Certificate of Incorporation, these By-laws or terms of the
notice thereof, any and all business may be transacted at any meeting even
though no notice shall have been given.
4
<PAGE>
Section 9. Removal of Directors. Any Director or the entire Board of
Directors may be removed, with or without cause, at any time, by action of the
holders of record of the majority of the issued and outstanding stock of the
Corporation entitled to vote at an election of the directors (a) present in
person or by proxy at a meeting of the holder of such stock, or (b) by a consent
in writing in the manner contemplated in Section 10 of Article II, and the
vacancy or vacancies in the Board of Directors caused by any such removal may be
filled by action of such a majority at such meeting or at any subsequent meeting
or by consent.
Section 10. Resignations. Any Director of the Corporation may resign at
any time by giving notice to the Chairman of the Board, the President or the
Secretary of the Corporation. The resignation of any Director shall take effect
upon receipt of notice thereof or at such later time as shall be specified in
such notice, and acceptance of such resignation shall not be necessary to make
it effective.
Section 11. Vacancies. Any newly created directorships or vacancies
occurring in the Board by reason of death, resignation, retirement,
disqualification or removal, with or without cause, may be filled by a majority
of the directors then in office though less than a quorum. Any Director so
chosen, whether selected to fill a vacancy or elected to a new directorship,
shall hold office until the next meeting of stockholders at which an election of
directors is in the regular order of business, and until his successor has been
elected and qualifies, or until he sooner dies, resigns or is removed.
Section 12. Compensation of Directors. No Director shall be entitled to
any salary as such, but the Board of Directors may fix, from time to time, a
reasonable annual fee for acting as a director and a reasonable fee to be paid
each Director for his services in attending meetings of the Board. Directors may
also be reimbursed by the Corporation for all reasonable expenses incurred in
travelling to and from meetings of the Board.
Section 13. Action without a Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors may be taken without a meeting
if written consent thereto is signed by all member of the Board, and such
written consent is filed with the minutes or proceedings of the Board.
Section 14. Telephonic Participation in Meetings. Members of the Board
of Directors may participate in a meeting of the Board by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at such meetings.
ARTICLE IV
COMMITTEES
----------
Section 1. Committees. The Bard of Directors may, by resolution passed
by a majority of the entire Board, designate one or more committees, each
committee to consist of one or more of the Directors of the Corporation, which,
to the extent provided in the
5
<PAGE>
resolution and permitted by law, shall have and may exercise the powers of the
Board of Directors in the management of the business and the affairs of the
Corporation and may authorize the seal of the Corporation to be affixed to all
papers which may require it. The Board of Directors may designate one or more
Directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. Each committee shall keep
regular minutes of its meetings and report the same to the Board of Directors
when required.
Section 2. Appointment of Additional Members to Committees. In the
absence or disqualification of any member of such committee or committees, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another Director to act at the meeting in the place of any such absent or
disqualified members.
ARTICLE V
OFFICERS
--------
Section 1. Principal Officers. The Board of Directors shall elect a
Chairman of the Board, a President, a Secretary and a Treasurer, and may in
addition elect one or more Vice Presidents and such other officers as it deems
fit; The Chairman of the Board, the President, the Secretary, the Treasurer, the
Vice Presidents, if any, being the principal officers of the Corporation. One
person may hold, and perform the duties of, any two or more of the said offices.
Section 2. Election and Term of Office. The principal officers of the
Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
Section 3. Other Officers. In addition, the Board may elect, or the
Chairman of the Board or President may appoint, such other officers as they deem
fit. Any such other officers chosen by the Board of Directors shall be
subordinate officers and shall hold office for such period, have such authority
and perform such duties as the Board of Directors, the Chairman of the Board or
the President may from time to time determine.
Section 4. Removal. Any officer may be removed, either with or without
cause, at any time, by resolution adopted by the Board of Directors at any
regular meeting of the Board, or at any special meeting of the Board called for
that purpose, at which a quorum is present.
Section 5. Resignations. Any officer may resign at any time by giving
written notice to the Chairman of the Board, the President, the Secretary or the
Board of Directors. Any such resignation shall take effect upon receipt of such
notice or at any later time specified therein, and the acceptance of such
resignation shall not be necessary to make it effective.
6
<PAGE>
Section 6. Vacancies. A vacancy in any office may be filled for the
unexpired portion of the term in the manner prescribed in these By-laws for
election or appointment to such office for such term.
Section 7. Chairman of the Board. The Chairman of the Board shall have
general powers and duties of supervision and management usually vested in the
office of the chairmen of the board of a corporation. The Chairman of the Board
of Directors shall preside, if present, at all meetings of the Board of
Directors and at all meetings of the stockholders. He shall have and perform
such other duties as from time to time may be assigned to him by the Board of
Directors.
Section 8. President. The President shall be the chief executive officer
of the Corporation and shall have the general powers and duties vested in the
office of chief executive officer of a corporation. He shall have general
supervision, direction and control of the business of the corporation. He shall,
in the absence of the Chairman, preside at all meetings of the shareholders and
the Board of Directors.
Section 9. Vice President. Each Vice President shall have such powers and
shall perform such duties as shall be assigned to him by the Board of Directors.
Section 10. Treasurer. The Treasurer shall have charge and custody of,
and be responsible for, all funds and securities of the Corporation. He shall
exhibit at all reasonable times his books of account and records to any of the
Directors of the Corporation upon application during business hours at the
office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman of
the Board, the President or the Board of Directors. The Treasurer shall give
such bond, if any, for the faithful discharge of his duties as the Board of
Directors may require.
Section 11. Secretary. The Secretary, if present, shall act as secretary
at all meetings of the Board of Directors and of the stockholders and keep the
minutes thereof in a book or books to be provided for that purpose; he shall see
that all notices required to be given by the Corporation are duly given and
served; he shall have charge of the stock records of the corporation, he shall
see that all reports, statements and other documents required by law are
properly kept and filed; and in general he shall perform all the duties incident
to the office of Secretary and such other duties as from time to time may be
assigned to him by the Chairman of the Board, the President or the Board of
Directors.
Section 12. Salaries. The salaries of the principal officers shall be
fixed from time to time by the Board of Directors, and the salaries of any other
officers may be fixed by the Chairman.
7
<PAGE>
ARTICLE VI
INDEMNIFICATION
---------------
Section 1. Mandatory Indemnification. The Corporation shall, to the full
extent permitted by Section 145 of the Delaware General Corporation Law, as
amended from time to time, indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director, officer or employee of the
Corporation or of any of its subsidiaries.
Section 2. Optional Indemnification. In all situations in which
indemnification is not mandatory under Section 1 of this Article VI, the
Corporation may, to the full extent permitted by Section 145 of the Delaware
General Corporation Law, as amended from time to time, indemnify all persons
whom it is empowered to indemnify pursuant thereto.
ARTICLE VII
SHARES AND THEIR TRANSFER
-------------------------
Section 1. Certificate for Stock. Every stockholder of the Corporation
shall be entitled to a certificate or certificates, to be in such form as the
Board of Directors shall prescribe, certifying the number of shares of the
capital stock of the Corporation owned by him. No certificates shall be issued
for partly paid shares.
Section 2. Stock Certificate Signature. The certificates for such stock
shall be numbered in the order in which they shall be issued and shall be signed
by the Chairman of the Board or the President and the Secretary or Treasurer of
the Corporation and its seal shall be affixed thereto. If such certificate is
countersigned (1) by a transfer agent other than the Corporation or its
employee, or (2) by a registrar other than the Corporation or its employee, the
signatures of such officers of the Corporation may be facsimiles. In case any
officer of the Corporation who has signed, or whose facsimile signature has been
placed upon, any such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of issue.
Section 3. Stock Ledger. A record shall be kept by the Secretary or by
any other officer, employee or agent designated by the Board of Director of the
name of each person, firm or corporation holding capital stock of the
Corporation, the number of shares represented by, and the respective dates of,
each certificate for such capital stock, and in case of cancellation of any such
certificate, the respective dates of cancellation.
Section 4. Registrations of Transfers of Stock. Registrations of
transfers of shares of the capital stock of the Corporation shall be made on the
books of the Corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary of the Corporation or with a transfer clerk or a transfer
8
<PAGE>
agent appointed as provided in Section 5 of this Article VII, and on surrender
of the certificate or certificates for such shares properly endorsed, with such
proof of authenticity of the signature as the Corporation or its agents may
reasonably require, and the payment of all taxes thereon. The person in whose
name shares of stock stand on the books of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation; provided, however,
that whenever any transfer of shares shall be made for collateral security, and
not absolutely, it shall be so expressed in the entry of the transfer if, when
the certificates are presented to the Corporation for transfer, both the
transferor and the transferee request the Corporation to do so.
Section 5. Regulations. The Board of Directors may make such rules and
regulations as it may deem expedient, not inconsistent with the Certificate of
the Incorporation or these By-laws, concerning the issue, transfer and
registration of certificates for shares of the stock of the Corporation. It may
appoint, or authorize any principal officer or officers to appoint, one or more
transfer clerks or one or more transfer agents and one or more registrars, and
may require all certificates of stock to bear the signature or signatures of any
of them.
Section 6. Lost, Stolen, Destroyed or Mutilated Certificates. Before any
certificates for stock of the Corporation shall be issued in exchange for
certificates which shall become mutilated or shall be lost, stolen, or
destroyed, proper evidence of such loss, theft, mutilation or destruction shall
be furnished to the Corporation, and if required by the Board of Directors, the
owner of the lost, stolen or destroyed certificate, or his legal
representatives, shall be required to give the Corporation a bond sufficient to
indemnify the Corporation against any claim made against it on account of the
alleged loss, theft or destruction of any such certificate.
Section 7. Record Dates. For the purpose of determining the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect to any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a date as a
record date for any such determination of stockholders. Such record date shall
not be more than sixty nor less than ten days before the date of such meeting,
nor shall it be more than sixty days prior to any other action.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
------------------------
Section 1. Corporate Seal. The Board of Directors shall provide a
corporate seal, which shall be in the form of a circle and shall bear the name
of the Corporation and words and figures showing that it was incorporated in the
State of Delaware in the year 1982. The Secretary shall be the custodian of the
seal. The Board of Directors may authorize a duplicate seal to be kept and used
by any other officer.
9
<PAGE>
Section 2. Voting of Stock Owned by the Corporation. The Board of
Directors may authorize any person on behalf of the Corporation to attend, vote
and grant proxies to be used at any meeting of stockholders of any corporation
(except the Corporation) in which the Corporation may hold stock.
Section 3. Dividends. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor, at any regular or special meeting, declare dividends upon the capital
stock of the Corporation as and when they deem expedient. Before declaring any
dividend, there may be set apart out of any funds of the Corporation available
for dividends such sum or sums as the Directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board of Directors shall deem conducive to the interests of the Corporation.
Section 4. Emergency By-laws. In the event of any emergency resulting
from a nuclear attack or similar disaster, and during the continuance of such
emergency, the following By-law provisions shall be in effect, notwithstanding
any other provisions of these By-laws:
(a) A meeting of the Board of Directors or of any committee thereof may
be called by any officer or director upon one hour's notice to all
persons entitled to notice whom, in the sole judgment of the
notifier, it is feasible to notify;
(b) The director or directors in attendance at the meeting of the Board
of Directors or of any committee thereof shall constitute a quorum;
and
(c) These By-laws may be amended or repealed, in whole or in part, by a
majority vote of the directors attending any meeting of the Board of
Directors, provided such amendment or repeal shall only be effective
for the duration of such emergency.
Section 5. Severability. If any provision of these By-laws is illegal or
unenforceable as such, such illegality or unenforceability shall not affect any
other provision of these By-laws and such other provisions shall continue in
full force and effect.
ARTICLE IX
AMENDMENTS OR REPEAL
--------------------
Section 1. Amendments or Repeal. These By-laws of the Corporation may be
altered, amended or repealed, in whole or in part, by the Board of Directors at
any regular or special meeting of the Board of Directors or by the affirmative
vote of the holders of record of a majority of the issued and outstanding stock
of the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon, or (b) by a consent in writing in the
manner contemplated in Section 10 of Article II; provided, however, that notice
of the proposed alteration, amendment or repeal is contained in the notice of
such meeting. By-
10
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laws, whether made or altered by the stockholders or by the Board of Directors,
shall be subject to alteration or repeal by the stockholders as provided in this
Section 1 of Article IX.
Section 2. Recording Amendments and Repeals. The text of all amendments
and repeals to these By-laws shall be attached to the By-laws with a notation of
the date of each such amendment or repeal and a notation of whether such
amendment or repeal was adopted by the Board of Directors or the stockholders.
ARTICLE X
APPROVAL OF AMENDED BY-LAWS AND
RECORD OF AMENDMENTS AND REPEALS
--------------------------------
Section 1. Approval and Effective Date. These By-laws have been approved
as the By-laws of the Corporation this 31st day of January, 1986 and shall be
effective as of said date.
Section 2. Amendments or Repeals.
Date Amended or
Section Involved Repealed Approved By
---------------- -------- -----------
Article II, Section 9 March 30, 1999 Board of Directors
Article III, Section 4 August 11, 1999 Board of Directors
Article III, Section 4 November 15, 1999 Board of Directors
11
<PAGE>
EXHIBIT 10.6
401 NORTH BROAD STREET
PHILADELPHIA, PENNSYLVANIA
AMENDMENT TO LEASE
This AMENDMENT TO LEASE is made as of 9th day of June, 1999, by and between
Callowhill Management, Inc., a Pennsylvania corporation, successor in interest
to BROAD AND NOBLE ASSOCIATES, INC. a Pennsylvania corporation, as managing
agent for 440 East 62/nd/ Street Company, a Pennsylvania limited partnership,
having its principal office at 401 North Broad Street, Philadelphia,
Pennsylvania 19108 and 440 East 62/nd/ Street Company, a Pennsylvania limited
partnership (collectively, "Landlord") and SUNGARD RECOVERY SERVICES INC.,
successor in interest to SUNGARD SERVICES COMPANY having its principal office at
1285 Drummers Lane, Wayne, Pennsylvania 19087 ("Tenant").
WITNESSETH:
A. WHEREAS, Landlord and Tenant have entered into that certain Agreement of
Lease dated April 12, 1984 for certain space on the sixth (6/th/) floor (the
"Sixth Floor Lease") of that certain building located at and known as 401 North
Broad Street, Philadelphia, Pennsylvania (the "Building"); and
B. WHEREAS, Landlord and Tenant have entered into that certain Agreement of
Lease dated September 1, 1986 for certain space on the Mezzanine floor (the
"Mezzanine Floor Lease") of the Building; and
C. WHEREAS, Landlord and Tenant have entered into that certain Amendment to
Lease dated October 1989 for certain space on the seventh (7th) floor (the
"Seventh Floor Lease") of the Building; and
D. WHEREAS, Landlord and Tenant have entered into that certain Amendment to
Lease dated September 30, 1991, for certain other space on the seventh floor
(7th) floor (the "Seventh Floor First Expansion Space Lease") of the Building;
and
E. WHEREAS, Landlord and Tenant have entered into that certain Amendment to
Lease dated November 19, 1992 for certain other space on the seventh (7th) floor
(the "Seventh Floor Second Expansion Space, Seventh Floor Third Expansion Space
and All Remaining Seventh Floor Space Lease") of the Building; and
<PAGE>
F. WHEREAS, Landlord and Tenant have entered into that certain Amendment to
Lease dated November 22, 1996 for certain space on the eighth (8th) floor (the
"Suite 816 Lease") of the Building; and
G. WHEREAS, Landlord and Tenant have entered into certain Amendment to
Lease dated December 23, 1996 for certain other space on the eighth (8th) floor
(the "Eighth Floor First Expansion Space and the Eighth Floor Second Expansion
Space Lease") of the Building;
H. WHEREAS, Landlord and Tenant have entered into that certain Amendment to
Lease dated as of March 1997 for certain space on the tenth (10th) floor (the
"Tenth Floor First Expansion Space and the Tenth Floor Second Expansion Space
Lease") of the Building. (The Mezzanine Lease, the Sixth Floor Lease, the
Seventh Floor Lease, the Seventh Floor First Expansion Space Lease and the
Seventh Floor Second Expansion Space Lease, the Seventh Floor Third Expansion
Space and All Remaining Seventh Floor Space Lease, the Suite 816 Lease, the
Eighth Floor First Expansion Space and the Eighth Floor Second Expansion Space
Lease, the Tenth Floor First Expansion Space and the Tenth Floor Second
Expansion Space Lease, and the terms and conditions of this Amendment to Lease,
together with all exhibits, riders, letter agreements, amendments and
modifications thereto are hereinafter collectively called the Lease); and
I. WHEREAS, Landlord and Tenant further desire to amend the Lease to
provide, inter alia, additional space for Tenant on the tenth (10/th/) floor and
the mezzanine floor of the Building and the removal by Landlord of asbestos in
the Building, all on the terms and conditions and as more fully set forth in
this Amendment to Lease.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord
(a) 16,420 square feet of space located on the tenth (10th) floor of the
Building (the "Tenth Floor Third Expansion Space") as such space is more
specifically shown on the tenth (10/th/) floor plan which plan is attached
hereto and made a part hereof as Exhibit "A", for a term commencing June 9, 1999
(the "Tenth Floor Commencement Date") and (b) 12,360 square feet of space
located on the mezzanine floor of the Building (the "Mezzanine Expansion Space")
as such space is more specifically shown on the Mezzanine floor plan which is
attached hereto and made a part hereof as Exhibit "B", for a term commencing
January 1, 2000. The term of the lease for the Tenth Floor Third Expansion Space
and the Mezzanine Expansion Space shall terminate at 11.59 p.m. eastern standard
time on December 31, 2004 (the "Termination Date") unless such term is sooner
terminated or is extended as provided in the Lease or by agreement of the
parties hereto, their successors or assigns, all on the same terms and
conditions as are contained in the Lease,
<PAGE>
including, without limitation, all renewal options and rights of first refusal
now or hereafter set forth in the Lease except as may be specifically modified
by and as specifically set forth in this Amendment to Lease. Tenant will have
access to and the right to condition, improve, alter, modify, fixture, decorate
and to do all things necessary or desirable as Tenant may determine to the Tenth
Floor Third Expansion Space and the Mezzanine Expansion Space.
2. (a) Commencing October 15, 1999 and thereafter until the Termination Date,
Tenant shall pay to Landlord, as basic rent for the Tenth Floor Third Expansion
Space, the sum of One Hundred Twenty Three Thousand One Hundred Fifty
($123,150.00) dollars annually, payable in equal monthly installments, in
advance, of Ten Thousand Two Hundred Sixty Two Dollars and Fifty Cents
($10,262.50) per month.
(b) Commencing January 1, 2000 and thereafter until the Termination Date,
Tenant shall pay to Landlord, as basic rent for the Mezzanine Expansion Space,
the sum of Ninety Five Thousand Seven Hundred Ninety ($95,790.00) dollars
annually, payable in equal monthly installments, in advance, of Seven Thousand
Nine Hundred Eighty Two Dollars and Fifty Cents (7,982.50) per month.
3. (a) With respect to the Tenth Floor Third Expansion Space only, Paragraphs
3(b) and 3(c) of the Lease are hereby amended to provide that the Real Estate
Taxes and Base Operating Charges for the Tenth Floor Third Expansion Space shall
be based on the calendar year 1999. The percentage of increase in the Real
Estate Taxes and the percentage of increase in the Operating Costs over the base
year allocable to the Tenth Floor Third Expansion Space will be 1.27%. The
method of computation of the increases of the Real Estate Taxes and the
Operating Costs shall be the same as stated in Paragraphs 3(b) and 3(c) of the
Lease.
(b) With respect to the Mezzanine Expansion Space only, Paragraphs 3(b) and
3(c) of the Lease are hereby amended to provide that the Real Estate Taxes and
Base Operating Charges for the Mezzanine Expansion Space shall be based on the
calendar year 2000. The percentage of increase in the Real Estate Taxes and the
percentage of increase in the Operating Costs over the base year allocable to
the Mezzanine Expansion Space will be 96%. The method of computation of the
increases of the Real Estate Taxes and the Operating Costs shall be the same as
stated in Paragraphs 3(b) and 3(c) of the Lease.
4 Notwithstanding anything contained to the contrary in any section or
provision of the Lease, the Lease is hereby modified and amended for all
purposes as follows:
(a) Tenant, without the necessity of any prior consent of Landlord and
without any contribution or sharing of consideration received by Tenant with
Landlord, may enter into such agreements as Tenant may desire with independent
third parties and customers of Tenant for the purpose of permitting the use of
the Tenth Floor Third Expansion Space and any and all other space now or
hereafter leased to Tenant under the Lease, as the same may be amended from time
to time, for computer facility and operations centers and data processing
centers with networking capacity and related office use, whether operated
independently by such third party or customer or by Tenant or Tenants agents
and/or managed by such customers and/or third parties and all
<PAGE>
activities related thereto, including, without limitation, ingress and egress
to any space now or hereafter leased to Tenant pursuant to the Lease, as the
same may be amended from time to time or pursuant to this Amendment to Lease,
whether by segregated entrance or general entrance to any such space leased to
Tenant.
(b) Any and all rights of Landlord to recapture any space now or
hereafter leased to Tenant set forth in the Lease is are hereby delete and of no
further force or effect.
5. Tenant shall have the sole and exclusive right and privilege to the
use of the transformer located on the tenth (10th) floor of the Building and to
feed to and from, connect and reconnect and to incorporate and integrate the
transformer into the power generating system of Tenant in connection with
Tenant's use and occupancy of the Premises. Tenant shall be charged at the
General Service Rate for all electricity consumed through the Tenth Floor Third
Expansion Space transformer. No other tenant in the Building shall have the
right or privilege to use said transformer.
6. Attached hereto as Exhibit "B" and made a part hereof is that certain
letter agreement dated January 12, 1999 entered into between Landlord (the
"Letter Agreement") in which, inter alia, Landlord agreed to cause the asbestos
and lead in the Tenth Floor Third Expansion Space to be removed and abated (the
"Tenth Floor Third Expansion Space Asbestos and Lead Removal Work") in
accordance with the terms and conditions of the Letter Agreement. Pursuant to
paragraph 4 of that certain Amendment to Lease dated December, 1996 ("December
1996 Amendment") between Tenant and Landlord, Tenant agreed to finance for
Landlord an amount up to the sum of $2,400,000 (the "Loan") for the sole
purpose of paying the actual costs of performing and installing the Repairs
and Improvements to the Premises and Building, as those terms are defined in the
December 1996 Amendment, all in accordance with the terms and conditions
contained in the December 1996 Amendment. Tenant and Landlord agree that Tenant
will permit Landlord to draw down any unadvanced portion of the Loan, up to the
maximum, outstanding aggregate amount, together with all other advances drawn by
Landlord under the Loan, of not more than $2,4000,000, for the purpose of
performing and installing the Tenth Floor Third Expansion Space Asbestos and
Lead Removal Work, all in accordance with the terms and conditions set forth in
paragraph 4 of the December 1996 Amendment.
7. The December 1996 Amendment is hereby modified for all purposes by
adding the following paragraph:
4(f). If (i) all of any part of the Premises or the Building or any
interest therein, or any interest in a corporation or partnership or any other
entity owning any interest in the Premises or the Building is sold, transferred
or changed ("Prohibited Change") without the prior written consent of Tenant,
which consent may be withheld in Tenant's sole and absolute discretion, or (ii)
the lease or any part thereof of this Amendment or any part hereof shall be
terminated for any reason whatsoever, whether by operation of law or otherwise,
Tenant, as Tenant's option, may declare all sums outstanding, together with all
interest accrued thereon, to be immediately due and payable and/or set-off
against rent, base rent, additional rent and any other sum payable by Tenant
under the Lease any and all sums outstanding hereunder. Such Prohibited Change
shall include,
<PAGE>
without limitation:
(1) changes in the equitable title or beneficial ownership of the Premises
or Building, whether or not recorded, including without limitation, entering
into an installment sale agreement with respect to the Premises or the Building;
(2) voluntary or involuntary transfers of any freehold interest in the
Premises or the Building, whether by operation of law or otherwise;
(3) transfer of a beneficial interest in the Premises or Building for
which a straw party is acting as nominal title holder or agent;
(4) transfer by an installment purchaser purchasing the Premises or
Building from an industrial development authority of such installment
purchaser's interest in the Premises or Building;
(5) transfer of any of the existing stock or issuance of new stock or the
transfer or issuance of any other interest in a corporation, or transfer of any
partnership interest in a partnership or transfer of any member or manager
interest in any limited liability company, or the transfer of any interest in
any other entity which is Landlord;
(6) transfer by lease or otherwise of the Premises or Building by or to a
tenant holding a leasehold interest in the Premises or the Building with an
option to purchase;
(7) transfer of any stock or of any other interest in a corporation,
partnership, limited liability company or other entity which holds such
leasehold interest in the Premises or the Building;
(8) transfer or termination of a leasehold interest in the Premises or
Building which leasehold interest is held by an entity in which Landlord has any
interest directly or indirectly, beneficially or legally.
Landlord shall immediately give written notice to Tenant of any such Prohibited
Change. As used herein, the term "transfer" shall be deemed to mean and refer to
any transfer, encumbrance, sale, pledge, assignment or conveyance of the
interest or item in question.
8. Except as herein expressly modified, all of the terms, covenants, and
conditions of the Lease shall remain in full force and affect.
IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment to
Lease as of the day and year first above written.
<PAGE>
MANAGING AGENT: CALLOWHILL MANAGEMENT, INC.
SUCCESSOR IN INTEREST TO BROAD AND NOBLE
ASSOCIATES, A PENNSYLVANIA CORPORATION
by: /s/ Allan Stillman
----------------------------------------------
Allan Stillman, President
attest: /s/ Barbara K. Dertaizes
------------------------------------------
title: Secretary
-------------------------------------------
(corporate seal)
LANDLORD: 440 east 62/nd/ STREET COMPANY, A
PENNSYLVANIA LIMITED PARTNERSHIP
by: /s/ Allan Stillman
----------------------------------------------
Allan Stillman, sole general partner
TENANT: SUNGARD SERVICES COMPANY,
now known as SUNGARD RECOVERY SERVICES INC.
a Pennsylvania corporation
by: /s/ Paul J. Loveland Jr.
----------------------------------------------
title: Assistant Controller
-------------------------------------------
attest: /s/ Karen K. Brunsler
------------------------------------------
title: Vice President, Human Resources
-------------------------------------------
(corporate seal)
<PAGE>
EXHIBIT 10.12
Amendment No. 1
to
SunGard(R) Data Systems Inc.
Restricted Stock Award Plan for Outside Directors
________________________________________________________________________________
SunGard Data Systems Inc., a Delaware corporation (the "Company"), originally
adopted the SunGard Data Systems Inc. Restricted Stock Award Plan for Outside
Directors (the "Plan") in 1991. Since that time, the Company has declared and
issued two 2-for-1 stock splits on its common stock, $0.01 par value per share
("Common Stock"). As a result of those splits, each Award (as defined in the
Plan) issuable under the Plan (without taking into account this Amendment No. 1)
would continue to be for 20,000 shares of Common Stock. The directors of the
Company have determined that the level of Awards issuable under the Plan should
be reduced.
Therefore, in accordance with resolutions duly adopted by the Board of Directors
of the Company at its meeting held on May 14, 1999, the Plan is hereby amended
to provide that each Award that is issued in accordance with the Plan at any
time after (but not on) the effective date of this Amendment No. 1 shall be for
a total of 5,000 shares of Common Stock.
The effective date of this Amendment No. 1 is May 14, 1999.
In witness whereof, and as evidence of the adoption of this Amendment No. 1 to
the SunGard Data Systems Inc. Restricted Stock Award Plan for Outside Directors,
the Company has caused the this Amendment No. 1 to be executed by its duly
authorized officer this 14th day of May, 1999.
SunGard Data Systems Inc.
By: /s/ James L. Mann
---------------------------------------
James L. Mann, Chairman, President
and Chief Executive Officer
<PAGE>
EXHIBIT 10.14
SunGard(R) Data Systems Inc.
Amendment No. 1
to
1994 Equity Incentive Plan
In accordance with the resolutions adopted by the Board of Directors of SunGard
Data Systems Inc., a Delaware corporation ("Company"), at its meeting held on
November 15, 1999, the SunGard Data Systems Inc. 1994 Equity Incentive Plan
("Plan") is amended as follows:
1. Section 11.3 of the Plan is amended in its entirety to read as follows:
"None of a Participant's rights under any Award or under the Plan may
be assigned or transferred in any manner other than by will or under
the laws of descent and distribution. The foregoing shall not,
however, restrict a Participant's rights with respect to Unrestricted
Stock or the outright transfer of cash, nor shall it restrict the
ability of a Participant's heirs, estate, beneficiaries, or personal
or legal representatives to enforce the terms of the Plan with respect
to Awards granted to the Participant. Notwithstanding the foregoing,
at the discretion of the Committee, an Award (other than an ISO) may
permit the transferability of such Award by a Participant solely to
members of the Participant's immediate family or trusts or family
partnerships for the benefit of the Participant and/or members of the
Participant's immediate family to the extent provided in such Award."
3. The effective date of this Amendment No. 1 is November 15, 1999.
Date: November 15, 1999 SunGard Data Systems Inc.
By: /s/ James L. Mann
-----------------------------------------
James L. Mann, Chairman, President
and Chief Executive Officer
<PAGE>
EXHIBIT 10.17
SunGard(R) Data Systems Inc.
Amendment No. 1
to
1996 Equity Incentive Plan
In accordance with the resolutions adopted by the Board of Directors of SunGard
Data Systems Inc., a Delaware corporation ("Company"), at its meeting held on
November 15, 1999, the SunGard Data Systems Inc. 1996 Equity Incentive Plan
("Plan") is amended as follows:
1. Section 11.3 of the Plan is amended in its entirety to read as follows:
"None of a Participant's rights under any Award or under the Plan may
be assigned or transferred in any manner other than by will or under
the laws of descent and distribution. The foregoing shall not,
however, restrict a Participant's rights with respect to Unrestricted
Stock or the outright transfer of cash, nor shall it restrict the
ability of a Participant's heirs, estate, beneficiaries, or personal
or legal representatives to enforce the terms of the Plan with respect
to Awards granted to the Participant. Notwithstanding the foregoing,
at the discretion of the Committee, an Award (other than an ISO) may
permit the transferability of such Award by a Participant solely to
members of the Participant's immediate family or trusts or family
partnerships for the benefit of the Participant and/or members of the
Participant's immediate family to the extent provided in such Award."
3. The effective date of this Amendment No. 1 is November 15, 1999.
Date: November 15, 1999 SunGard Data Systems Inc.
By: /s/ James L. Mann
-----------------------------------------
James L. Mann, Chairman, President
and Chief Executive Officer
<PAGE>
EXHIBIT 10.19
SUNGARD DATA SYSTEMS INC.
2000 EQUITY INCENTIVE PLAN
- --------------------------------------------------------------------------------
1. Purpose
The purpose of the SunGard Data Systems Inc. 2000 Equity Incentive Plan
(the "Plan") is to promote the long-term retention of employees and directors of
SunGard Data Systems Inc. ("SunGard") or any "parent" or "subsidiary" (as those
terms are defined in Rule 405 promulgated under the Securities Act of 1933, as
amended) of SunGard (collectively, the "Company") during the time of such
relationship to SunGard, to further reward these persons for their contributions
to the Company's success, to provide additional incentive to these persons to
continue to make similar contributions in the future, and to further align the
interests of these persons with those of SunGard's stockholders. These purposes
will be achieved by granting to such persons, in accordance with the provisions
of this Plan, Options, Restricted Stock or Unrestricted Stock Awards or
Performance Awards, for shares of SunGard's common stock, $0.01 par value per
share ("Common Stock"), or Loans or Supplemental Grants, or combinations thereof
("Awards").
2. Aggregate Number of Shares
2.1 The aggregate number of shares of Common Stock for which Awards
may be granted under the Plan will be six million five hundred thousand
(6,500,000) shares, with (a) an individual limit of one million (1,000,000)
shares per Participant (as defined in Section 3.1 below) per calendar year, and
(b) an aggregate limit of one million (1,000,000) shares for all Restricted
Stock and Unrestricted Stock Awards (whether issued directly or pursuant to
Performance Awards), with all such maximum numbers of shares being subject to
adjustment in accordance with this Section 2.1. If there is any change in the
capitalization of SunGard, such as by stock dividend, stock split, combination
of shares, exchange of securities, recapitalization or other event which the
Compensation Committee (the "Committee") of the Board of Directors (the "Board")
of SunGard deems, in its sole discretion, to be similar circumstances, the
aggregate number and/or kind of securities for which Awards may be granted under
the Plan and the terms of individual Awards shall be appropriately adjusted in a
manner determined by the Committee. No fractional shares of Common Stock will be
delivered under the Plan. The Committee may also make such adjustments to take
into account material changes in law or in accounting practices or principles,
mergers, consolidations, acquisitions, dispositions or similar corporate
transactions, or any other event, as the Committee may determine in its sole
discretion.
2.2 Treasury shares, reacquired shares and unissued shares of Common
Stock may be used for purposes of the Plan, at SunGard's sole discretion.
2.3 Shares of Common Stock that were issuable pursuant to an Award
that has terminated but with respect to which such Award had not been exercised,
shares of Common Stock that are issued pursuant to an Award but that are
subsequently forfeited, and shares of Common Stock that were issuable pursuant
to an Award that was payable in Common Stock or cash but that was satisfied in
cash, shall be available for future Awards under the Plan.
1.
<PAGE>
3. Eligibility
3.1 All current and future employees, including "officers," of the
Company ("Employees") and also all members of the Board of SunGard ("Directors")
shall be eligible to receive Awards under the Plan. No eligible Employee or
Director (a "Participant") shall have any right to receive an Award except as
expressly provided in the Plan. The term "officers" means each person who is an
"officer" as defined in Rule 16a-1(f) promulgated under the Securities Exchange
Act of 1934, as amended (the "1934 Act").
3.2 The Committee shall determine the Participants who shall actually
receive Awards under the Plan, except that in the case of a Participant who is
also a Director, the grant of an Award shall be conditioned on the approval of a
majority of the Board (excluding the Participant for purposes of determining the
number of votes necessary to constitute a majority). In making such
determinations, the Committee shall consider the positions and responsibilities
of Participants, their past performance and contributions to the Company's
growth and expansion, the value of their services to the Company, the difficulty
of finding qualified replacements, and such other factors as the Committee deems
pertinent in its sole discretion.
4. Administration
4.1 The Plan shall be administered by the Committee. The Committee
may delegate all or any portion of its authority hereunder to one or more
subcommittees consisting of at least one Committee member (and references in
this Plan to the "Committee" shall thereafter be to the Committee or such
subcommittees). The Committee may consist solely of two or more "non-employee
directors" within the meaning of Rule 16b-3(b)(3) under the 1934 Act or any
future corresponding rule, or "outside directors" within the meaning of the
regulations promulgated under Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), provided that the failure of the Committee or of
the Board for any reason to be composed solely of non-employee directors or
outside directors shall not prevent an Award from being considered granted under
this Plan. In addition to its other authority and subject to the provisions of
the Plan, the Committee shall have the authority to determine, in its sole
discretion, the Participants who shall be eligible to receive Awards, the
Participants who shall actually receive Awards, the size of each Award,
including the number of shares of Common Stock subject to the Award, the type or
types of each Award, the date on which each Award shall be granted, the terms
and conditions of each Award, whether to waive compliance by a Participant with
any obligations to be performed by the Participant under an Award or waive any
term or condition of an Award, whether to amend or cancel an existing Award in
whole or in part (except that the Committee may not, other than as specifically
authorized herein, change the exercise price of an Award or cancel an existing
Award in exchange for a new Award with a lower exercise price, and may not,
without the consent of the holder of an Award or unless specifically authorized
by the terms of an Award, take any action under this clause with respect to such
Award if such action would adversely affect the rights of such holder), and the
form or forms of instruments that are required or deemed appropriate under the
Plan, including any written notices and elections required of Participants.
4.2 The Committee may adopt such rules for the administration of the
Plan as it deems necessary or advisable, in its sole discretion. For all
purposes of the Plan, a majority of
2.
<PAGE>
the members of the Committee shall constitute a quorum, and the vote or written
consent of a majority of the members of the Committee on a particular matter
shall constitute the act of the Committee on that matter. The Committee shall
have the exclusive right to construe the Plan and any Award, to settle all
controversies regarding the Plan or any Award, to correct defects and omissions
in the Plan and in any Award, and to take such further actions as the Committee
deems necessary or advisable, in its sole discretion, to carry out the purpose
and intent of the Plan. Such actions shall be final, binding and conclusive upon
all parties concerned.
4.3 No member of the Committee or the Board shall be liable for any
act or omission (whether or not negligent) taken or omitted in good faith, or
for the good faith exercise of any authority or discretion granted in the Plan
to the Committee or the Board, or for any act or omission of any other member of
the Committee or the Board.
4.4 All costs incurred in connection with the administration and
operation of the Plan shall be paid by the Company. Except for the express
obligations of the Company under the Plan and under Awards granted in accordance
with the provisions of the Plan, the Company shall have no liability with
respect to any Award, or to any Participant or any transferee of shares of
Common Stock from any Participant, including, but not limited to, any tax
liabilities, capital losses, or other costs or losses incurred by any
Participant or any such transferee.
5. Types of Awards
5.1 Options.
(a) An Option is an Award entitling the recipient on exercise
thereof to purchase Common Stock at a specified exercise price. Both "incentive
stock options," as defined in Section 422 of the Code (any Option intended to
qualify as an incentive stock option being hereinafter referred to as an "ISO"),
and Options that are not incentive stock options ("non-ISO") may be granted
under the Plan; provided however, that an ISO may only be granted to a person
who is a common law employee of SunGard or a "parent corporation" or "subsidiary
corporation" of SunGard as those terms are defined in subsections (e) and (f) of
Section 424 of the Code ( each such "parent corporation" or "subsidiary
corporation" being an "ISO-Affiliate").
(b) The exercise price of an Option will be determined by the
Committee subject to the following:
(1) The exercise price of an ISO shall not be less than
100% (110% in the case of an ISO granted to a ten percent stockholder) of the
fair market value (as defined in Section 11.8) of the Common Stock subject to
the ISO, determined as of the time the ISO is granted. A "ten-percent
stockholder" is any person who at the time of grant owns, directly or
indirectly, or is deemed to own by reason of the attribution rules of Section
424(d) of the Code, stock possessing more than 10% of the total combined voting
power of all classes of stock of SunGard or of any of its subsidiaries.
(2) The exercise price of a non-ISO shall not be less than
100% of the fair market value of the Common Stock subject to the non-ISO,
determined as of the time the non-ISO is granted, except that:
3.
<PAGE>
(A) the exercise price of a non-ISO may be equal to or
greater than 85% of the fair market value of the Common Stock subject to the
non-ISO, if the discount is granted in lieu of a reasonable amount of cash
compensation; or
(B) the exercise price of a non-ISO granted pursuant
to a Performance Award may be (i) 100% of the fair market value of the Common
Stock subject to the non-ISO, determined either as of the time the Performance
Award is granted or as of the time the non-ISO is granted pursuant to the
Performance Award; or (ii) an amount less than such fair market value if the
discount is granted in lieu of a reasonable amount of cash compensation as
consideration for exceeding the goal(s) set forth in the Performance Award.
(3) In no case may the exercise price paid for Common Stock
which is part of an original issue of authorized Common Stock be less than the
par value per share of the Common Stock.
(4) Notwithstanding (1) and (2) above, an Option (whether
an ISO or non-ISO) may be granted with an exercise price determined according to
the provisions of Section 424(a) of the Code, if the grant of such Option is
pursuant to a transaction described in Section 424(a) of the Code.
(c) The period during which an Option may be exercised will be
determined by the Committee, except that the period during which an ISO may be
exercised will not exceed ten years (five years, in the case of an ISO granted
to a ten-percent stockholder) from the day immediately preceding the date the
Option was granted.
(d) An Option will become vested and/or exercisable at such time
or times, and on such terms and conditions, as the Committee may determine. The
Committee may at any time accelerate the time at which all or any part of an
Option becomes vested and/or exercisable. Any exercise of an Option must be in
writing, signed by the proper person and delivered or mailed to the Company,
accompanied by (1) any documents required by the Committee and (2) payment in
full in accordance with Section 5.1(e) below for the number of shares for which
the Option is exercised.
(e) Stock purchased on exercise of an Option must be paid for as
follows: (1) in cash or by check (acceptable to SunGard in accordance with
guidelines established for this purpose), bank draft or money order payable to
the order of SunGard or (2) if so permitted by the instrument evidencing the
Option, (A) through the delivery of shares of Common Stock which have been held
by the Participant for at least six months (unless the Committee expressly
approves a shorter period) and which have a fair market value on the last
business day preceding the date of exercise equal to the exercise price, or (B)
by delivery of a promissory note of the Participant to SunGard, payable on such
terms and conditions as the Committee may determine, or (C) by delivery of an
unconditional and irrevocable undertaking by a broker to deliver promptly to
SunGard sufficient funds to pay the exercise price, or (D) by any combination of
the permissible forms of payment; provided, that if the Common Stock delivered
upon exercise of the Option is an original issue of authorized Common Stock, at
least so much of the exercise price as represents the par value of such Common
Stock must be paid other than by the Participant's promissory note.
4.
<PAGE>
(f) If the market price of shares of Common Stock subject to an
Option exceeds the aggregate exercise price of the Option at the time of its
exercise, the Committee may cancel the Option and cause SunGard to pay in cash
or in shares of Common Stock (at a price per share equal to the fair market
value per share) to the person exercising the Option an amount equal to the
difference between the fair market value of the Common Stock which would have
been purchased pursuant to the exercise (determined on the date the Option is
canceled) and the aggregate exercise price which would have been paid. The
Committee may exercise its discretion to take such action only if it has
received a written request from the person exercising the Option, but such a
request will not be binding on the Committee.
5.2 Restricted and Unrestricted Stock.
(a) A Restricted Stock Award entitles the recipient to acquire,
for a purchase price not less than the par value, shares of Common Stock subject
to the restrictions described in Section 5.2(d) below ("Restricted Stock").
(b) A Participant who is granted a Restricted Stock Award shall
have no rights with respect to such Award unless the Participant accepts the
Award by written instrument delivered or mailed to SunGard accompanied by
payment in full of the specified purchase price, if any, of the shares covered
by the Award. Payment may be by certified or bank check or other instrument
acceptable to the Committee.
(c) A Participant who receives Restricted Stock shall have all
the rights of a stockholder with respect to such stock, including voting and
dividend rights, subject to the restrictions described in paragraph (d) below
and any other conditions imposed by the Committee at the time of grant. Unless
the Committee otherwise determines, certificates evidencing shares of Restricted
Stock will remain in the possession of the Company until such shares are free of
all restrictions under the Plan.
(d) Except as otherwise specifically provided by the Plan or the
Award, Restricted Stock may not be sold, assigned, exchanged, pledged, gifted or
otherwise disposed of, or transferred, and if a Participant experiences a Status
Change (as defined in Section 6.1 below) for any reason, must be offered to
SunGard for purchase for the amount of cash paid for such stock, or forfeited to
the Company if no cash was paid. These restrictions will lapse and the shares
will become unrestricted ("Unrestricted Stock") at such time or times, and on
such terms and conditions, as the Committee may determine. In the event of a
Status Change, the Committee may accelerate the time at which the restrictions
on all or any part of the shares will lapse.
(e) Any Participant making, or required by an Award to make, an
election under Section 83(b) of the Code with respect to Restricted Stock shall
deliver to SunGard, within 10 days of the filing of such election with the
Internal Revenue Service, a copy of such election.
(f) The Committee may, at the time an Award described in this
Section 5 is granted, provide that any or all of the Common Stock delivered
pursuant to such Award will be Restricted Stock.
5.
<PAGE>
(g) The Committee may, in its sole discretion, approve the sale
to any Participant of shares of Common Stock free of restrictions under the Plan
for a price which is not less than the par value of the Common Stock, provided
that the value of such Award, which equals the difference between the price and
the fair market value of such shares on the date of grant, is in lieu of a
reasonable amount of cash compensation.
5.3 Performance Awards. A Performance Award entitles the recipient to
receive, without payment, an Award or Awards described in this Section 5
following the attainment of such performance goals, during such measurement
period or periods (which must be at least one year), and on such other terms and
conditions, all as the Committee may determine. Performance goals may be related
to overall corporate performance, operating group or business unit performance,
personal performance or such other category of performance as the Committee may
determine. Financial performance may be measured by revenue, operating income,
net income, earnings per share, number of days sales outstanding in accounts
receivable, productivity, return on equity, common stock price, price-earnings
multiple, or such other financial factors as the Committee may determine.
Performance goals also may be included as terms and conditions of other types of
Awards.
5.4 Loans and Supplemental Grants.
(a) The Company may make a loan to a Participant ("Loan"),
either in connection with the purchase of Common Stock under the Award or the
payment of any Federal, state and local income tax with respect to income
recognized as a result of the Award. The Committee shall have the authority, in
its sole discretion, to determine whether to make a Loan, the amount, terms and
conditions of the Loan, including the interest rate (which may be zero), whether
the Loan is to be secured or unsecured or with or without recourse against the
borrower, the terms on which the Loan is to be repaid, and the terms and
conditions, if any, under which the Loan may be forgiven. In no event shall any
Loan have a term (including extensions) in excess of ten years.
(b) In connection with any Award, the Committee may grant a cash
award to the Participant ("Supplemental Grant") not to exceed an amount equal to
(1) the amount of any Federal, state and local income tax on ordinary income for
which the Participant may be liable with respect to the Award, determined by
assuming taxation at the highest marginal rate, plus (2) an additional amount on
a grossed-up basis intended to make the Participant whole on an after-tax basis
after discharging all the Participant's income tax liabilities arising from all
payments under this Section 5. Any payments under this Section 5.4(b) shall be
made at the time the Participant incurs Federal income tax liability with
respect to the Award.
(c) In connection with any Performance Award or any Award that
depends in whole or in part upon the attainment of performance goals, the
Committee may grant a cash award to the Participant for exceeding the
performance goals set forth in such Award.
6. Events Affecting Outstanding Awards.
6.1 Status Change Due to Death or Disability. If by reason of death
or permanent disability (as determined by the Committee) a Participant
experiences a Status
6.
<PAGE>
Change (a "Status Change" occurs when a Participant is both not an Employee and
not a Director), the following rules shall apply, unless otherwise determined by
the Committee:
(a) All Options held by the Participant at the time of such
Status Change, to the extent then exercisable, will continue to be exercisable
by the Participant's heirs, executor, administrator or other legal
representative, for a period of one year after the Participant's Status Change.
After the expiration of such one-year period, all such Options shall terminate.
In no event, however, shall an Option remain exercisable beyond the latest date
on which it could have been exercised without regard to this Section 6. All
Options held by a Participant at the time of such Status Change that are not
then exercisable shall terminate upon such Status Change.
(b) All Restricted Stock held by the Participant at the time of
such Status Change shall immediately become free of all restrictions and
conditions.
(c) Any payment or benefit under a Performance Award or
Supplemental Grant to which the Participant was not irrevocably entitled at the
time of such Status Change shall be forfeited and the Award canceled as of the
time of such Status Change.
6.2 Status Change Not Due to Death or Disability. If a Participant
experiences a Status Change other than by reason of death or permanent
disability (as determined by the Committee), the following rules shall apply,
unless otherwise determined by the Committee at the time of grant of an Award:
(a) All Options held by the Participant at the time of such
Status Change, to the extent then exercisable, will continue to be exercisable
by the Participant for a period of three months after the Participant's Status
Change, provided that no Option shall terminate earlier than three months after
the date the Option first becomes exercisable. After the expiration of such
period, such Options shall terminate. In no event, however, shall an Option
remain exercisable beyond the latest date on which it could have been exercised
without regard to this Section 6. All Options held by a Participant at the time
of such Status Change that are not then exercisable shall terminate upon such
Status Change.
(b) All Restricted Stock held by the Participant at the time of
such Status Change shall immediately become free of all restrictions and
conditions, unless such Status Change results from a voluntary resignation or
termination for Cause (as defined in Section 6.2(d) or Section 6.2(e)), in which
event all Restricted Stock held by the Participant at the time of the Status
Change shall be transferred to the Company (and, in the event the certificates
representing such Restricted Stock are held by the Company, such Restricted
Stock shall be so transferred without any further action by the Participant) in
accordance with Section 5.2 above.
(c) Any payment or benefit under a Performance Award or
Supplemental Grant to which the Participant was not irrevocably entitled at the
time of such Status Change shall be forfeited and the Award canceled as of the
date of such Status Change.
7.
<PAGE>
(d) In the case of a Participant who is an Officer or Director,
a Status Change made by the Company shall be for "Cause" only if: (1) at least
75% of the members of the Board determined that such Participant (A) was guilty
of gross negligence or willful misconduct in the performance of his or her
duties for the Company, or (B) breached or violated, in a material respect, any
agreement between such Participant and the Company or any of the Company's
policy statements regarding conflicts-of-interest, insider trading or
confidentiality, or (C) committed a material act of dishonesty or breach of
trust; (2) such determination was made at a duly convened meeting of the Board
with respect to which the Participant received at least 10 days prior written
notice and had a reasonable opportunity to make a statement and answer the
allegations against him or her; and (3) either (A) such Participant was given a
reasonable opportunity to take remedial action but failed or refused to do so,
or (B) at least 75% of the members of the Board also determined, at such
meeting, that an opportunity to take remedial action would not have been
meaningful under the circumstances.
(e) In the case of a Participant who is not an Officer or
Director, a Status Change made by the Company shall be for "Cause" only if: (1)
the member (or members) of the Company's management normally empowered to make
such a determination in the course of the Company's business determined that
such Participant (A) was guilty of gross negligence or willful misconduct in the
performance of his or her duties for the Company, or (B) breached or violated,
in a material respect, any agreement between such Participant and the Company or
any of the Company's policy statements regarding conflicts-of-interest, insider
trading or confidentiality, or (C) committed a material act of dishonesty or
breach of trust; and (2) such determination was made after such Participant
received at least 10 days prior written notice and had a reasonable opportunity
to make a statement and answer the allegations against him or her.
(f) For all purposes of this Section 6.2 and Section 6.3: (1) if
a Participant is an Employee (and not also a Director) of a subsidiary of
SunGard and such subsidiary ceases to be a subsidiary of SunGard, then the
Participant will be deemed to have experienced a Status Change made by the
Company without Cause; (2) a Participant will not be deemed to have experienced
a Status Change if the Participant is transferred from SunGard to a subsidiary
of SunGard, or vice versa, or from one subsidiary of SunGard to another; and (3)
if a Participant who is an Employee, but not also a Director, terminates his or
her employment with the Company following a reduction in his or her rate of
compensation, then the Participant's Status Change will be deemed to have been
made by the Company without Cause.
6.3 Change in Control.
(a) In the event of a Change in Control (as defined in Section
6.3(b)), the following rules will apply, unless otherwise expressly provided by
the Committee at the time of the grant of an Award or unless otherwise
determined by the Board in accordance with Section 6.3(c):
(1) Each outstanding Option shall automatically become
exercisable in full six months after the occurrence of such Change in Control
or, if sooner, upon a termination by the Company of the Participant's employment
with or service to the Company for any reason other than for Cause (as defined
in Section 6.2(d)). This provision shall not
8.
<PAGE>
prevent an Option from becoming exercisable sooner as to Common Stock or cash
that would otherwise have become available under such Option or Right during
such period.
(2) Each outstanding share of Restricted Stock shall
automatically become free of all restrictions and conditions six months after
the occurrence of such Change in Control or, if sooner, upon a termination by
the Company of the Participant's employment with or service to the Company for
any reason other than for Cause (as defined in Section 6.2(d)). This provision
shall not prevent the earlier lapse of any restrictions or conditions on
Restricted Stock that would otherwise have lapsed during such period.
(3) Conditions on Performance Awards and Supplemental
Grants which relate only to the passage of time and continued employment shall
automatically terminate six months after the occurrence of such Change in
Control or, if sooner, upon a termination by the Company of the Participant's
employment with or service to the Company for any reason other than for Cause
(as defined in Section 6.2(d)). This provision shall not prevent the earlier
lapse of any conditions relating to the passage of time and continued employment
that would otherwise have lapsed during such period. Performance or other
conditions (other than conditions relating only to the passage of time and
continued employment) shall continue to apply unless otherwise provided in the
instrument evidencing the Awards or in any other agreement between the
Participant and the Company or unless otherwise agreed to by the Committee.
(b) A "Change in Control" means: (1) the occurrence of an event
that would, if known to SunGard's management, be required to be reported by
SunGard under Item 1(a) of Form 8-K pursuant to the 1934 Act; or (2) the
acquisition or receipt, in any manner, by any person (as defined for purposes of
the 1934 Act) or any group of persons acting in concert, of direct or indirect
beneficial ownership (as defined for purposes of the 1934 Act) of 20% or more of
the combined voting securities ordinarily having the right to vote for the
election of directors of SunGard; or (3) a change in the constituency of the
Board with the result that individuals (the "Incumbent Directors") who are
members of the Board on the Effective Date (as specified in Section 9) cease for
any reason to constitute at least a majority of the Board, provided that any
individual who is elected to the Board after the Effective Date and whose
nomination for election was unanimously approved by the Incumbent Directors
shall be considered an Incumbent Director beginning on the date of his or her
election to the Board; or (4) the sale, exchange or other disposition of all or
a significant portion of the Company's business or assets, or the execution by
the Company of a binding agreement providing for such a transaction.
(c) The provisions of Section 6.3(a) shall not apply to the
extent expressly determined by at least 75% of the Incumbent Directors at a duly
convened meeting of the Board held before the occurrence of a Change in Control.
6.4 Change from Employee of SunGard or ISO-Affiliate. If an Employee
of SunGard or an ISO-Affiliate becomes instead an Employee of the Company (other
than of SunGard or another ISO-Affiliate), or ceases to be an Employee entirely,
any ISO held by such Employee shall cease to be an ISO to the extent not
exercised within the three months following termination of service as an
Employee of SunGard or the ISO-Affiliate.
9.
<PAGE>
7. Grant and Acceptance of Awards
7.1 The Committee's approval of a grant of an Award under the Plan,
including the names of Participants and the size of the Award, including the
number of shares of Common Stock subject to the Award, shall be reflected in
minutes of meetings held by the Committee or the Board or in written consents
signed by members of the Committee or the Board. Once approved by the Committee,
each Award shall be evidenced by such written instrument, containing such terms
as are required by the Plan and such other terms, consistent with the provisions
of the Plan, as may be approved from time to time by the Committee.
7.2 Each instrument may be in the form of agreements to be executed
by both the Participant and the Company, or certificates, letters or similar
instruments, which need not be executed by the Participant but acceptance of
which shall evidence agreement to the terms thereof. The receipt of an Award
shall not impose any obligation on the Participant to accept the Award.
7.3 Except as specifically provided by the Plan or the instrument
evidencing an Award, a Participant shall not become a stockholder of SunGard
until (i) the Participant makes any required payments in respect of the Common
Stock issued or issuable pursuant to the Award, (ii) the Participant furnishes
SunGard with any required agreements, certificates, letters or other
instruments, and (iii) the Participant actually receives the shares of Common
Stock. Subject to any terms and conditions imposed by the Plan or the instrument
evidencing an Award, upon the occurrence of all of the conditions set forth in
the immediately preceding sentence, a Participant shall have all rights of a
stockholder with respect to shares of Common Stock, including, but not limited
to, the right to vote such shares and to receive dividends and other
distributions paid with respect to such shares. The Committee may, upon such
conditions as it deems appropriate, provide that a Participant will receive a
benefit in lieu of cash dividends that would have been payable on any and all
Common Stock subject to the Participant's Award, had such Common Stock been
outstanding. Without limitation, the Committee may provide for payment to the
Participant of amounts representing such dividends, either currently or in the
future, or for the investment of such amounts on behalf of the Participant.
7.4 Notwithstanding any other provision of the Plan, the Company
shall not be obligated to deliver any shares of Common Stock pursuant to the
Plan or to remove any restriction from shares of Common Stock previously
delivered under the Plan (a) until all conditions to the Award have been
satisfied or removed, (b) until, in the opinion of SunGard's General Counsel,
all applicable Federal and state laws and regulations have been complied with,
(c) if the outstanding Common Stock is at the time listed on any stock exchange
or included for quotation on an inter-dealer system, until the shares to be
delivered have been listed or included or authorized to be listed or included on
such exchange or system upon official notice of notice of issuance, (d) if it
might cause SunGard to issue or sell more shares of Common Stock than SunGard is
then legally entitled to issue or sell, and (e) until all other legal matters in
connection with the issuance and delivery of such shares have been approved by
SunGard's General Counsel. If the sale of Common Stock has not been registered
under the Securities Act of 1933, as amended, the Company may require, as a
condition to exercise of an Award, such representations or agreements as
SunGard's General Counsel may consider appropriate to avoid violation of such
Act and may require that the certificates evidencing such Common Stock bear
10.
<PAGE>
an appropriate legend restricting transfer. If an Award is exercised by the
Participant's legal representative, the Company shall be under no obligation to
deliver Common Stock pursuant to such exercise until the Company is satisfied as
to the authority of such representative.
8. Tax Withholding
The Company shall withhold from any cash payment made pursuant to an Award
an amount sufficient to satisfy all Federal, state and local withholding tax
requirements (the "withholding requirements"). In the case of an Award pursuant
to which Common Stock may be delivered, the Committee shall have the right to
require that the Participant or other appropriate person remit to the Company an
amount sufficient to satisfy the withholding requirements, or make other
arrangements satisfactory to the Committee with regard to such requirements,
prior to the delivery of any Common Stock. If and to the extent that such
withholding is required, the Committee may permit a Participant to elect at such
time and in such manner as the Committee may determine to have the Company hold
back from the shares of Common Stock to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the minimum
withholding requirement. If at the time an ISO is exercised, the Committee
determines that the Company could be liable for withholding requirements with
respect to a disposition of the Common Stock received upon exercise, the
Committee may require as a condition of exercise that the person exercising the
ISO agree (a) to inform the Company promptly of any disposition (within the
meaning of Section 424(c) of the Code) of Common Stock received upon exercise,
and (b) to give such security as the Committee deems adequate to meet the
potential liability of the Company for the withholding requirements and to
augment such security from time to time in any amount reasonably deemed
necessary by the Committee to preserve the adequacy of such security.
9. Board Approval, Effective Date and Term of Plan
The Plan was adopted by the Board on February 22, 2000, subject to the
approval of SunGard's stockholders. The Plan shall be submitted to SunGard's
stockholders for approval at SunGard's 2000 annual meeting of stockholders. If
such approval is not obtained at such meeting (or at any subsequent meeting at
which such approval is sought), then, at the discretion of the Board, this Plan
may be re-submitted to SunGard's stockholders for approval at any subsequent
annual meeting of stockholders or at any special meeting of stockholders
(including a special meeting that may be called solely for that purpose). The
Plan shall not become effective unless and until it is approved by the
affirmative vote of the holders of a majority of the outstanding shares of
SunGard's Common Stock represented and entitled to vote at a duly convened
meeting of SunGard's stockholders. If this Plan is so approved by SunGard's
stockholders, then the date of such approval shall be the effective date of this
Plan ("Effective Date"). No Award shall be granted more than ten years after
the Effective Date and no ISO shall be granted on or after February 22, 2010.
10. Effect, Amendment, Suspension and Termination
Neither adoption of the Plan nor the grant of Awards to a Participant will
affect the Company's right to grant to such Participant awards that are not
subject to the Plan, to issue to such Participant Common Stock as a bonus or
otherwise, or to adopt other plans or arrangements under which Common Stock may
be issued to Employees or other persons or entities. The
11.
<PAGE>
Board reserves the right, at any time and from time to time, to amend the Plan
in any way, or to suspend or terminate the Plan, effective as of the date
specified by the Board when it takes such action, which date may be before or
after the date the Board takes such action; provided that any such action shall
not affect any Awards granted before the actual date on which such action is
taken by the Board. Any amendment of the Plan may be submitted for the approval
of SunGard's stockholders as may be deemed necessary or desirable at the time of
such amendment.
11. Other Provisions
11.1 Nothing contained in the Plan or any Award shall confer upon any
Employee or other Participant the right to continue in the employ of, or to
continue to provide service to, the Company or any affiliated entity or person,
or interfere in any way with the right of the Company or any affiliated entity
or person to terminate the employment or service of any Employee or other
Participant for any reason.
11.2 Corporate action constituting an offer by SunGard of Common
Stock to any Participant under the terms of an Award shall be deemed completed
as of the date of grant of the Award, regardless of when the instrument,
certificate, or letter evidencing the Award is actually received or accepted by
the Participant.
11.3 None of a Participant's rights under any Award or under the Plan
may be assigned or transferred in any manner other than by will or under the
laws of descent and distribution. The foregoing shall not, however, restrict a
Participant's rights with respect to Unrestricted Stock or the outright transfer
of cash, nor shall it restrict the ability of a Participant's heirs, estate,
beneficiaries, or personal or legal representatives to enforce the terms of the
Plan with respect to Awards granted to the Participant. Notwithstanding the
foregoing, at the discretion of the Committee, the terms of an Award may permit
a Participant to transfer such Award to one or more members of the Participant's
family or to trusts, family partnerships, or other entities for the benefit of
the Participant and/or members of the Participant's family to the extent
provided in such Award and permitted under the terms for use of Form S-8
promulgated under the Securities Act of 1933, as amended.
11.4 The Plan, and all Awards granted hereunder, shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to the conflict of laws provisions thereof. The headings
of the Sections of the Plan are for convenience of reference only and shall not
affect the interpretation of the Plan. All pronouns and similar references in
the Plan shall be construed to be of such number and gender as the context
requires or permits. If any provision of the Plan is determined to be
unenforceable for any reason, then that provision shall be deemed to have been
deleted or modified to the extent necessary to make it enforceable, and the
remaining provisions of the Plan shall be affected.
11.5 All notices with respect to the Plan shall be in writing and
shall be hand delivered or sent by certified mail or reputable overnight
delivery service, expenses prepaid. Notices to the Company or the Committee
shall be delivered or sent to SunGard's headquarters to the attention of its
General Counsel. Notices to any Participant or holder of shares of
12.
<PAGE>
Common Stock issued pursuant to an Award shall be sufficient if delivered or
sent to such person's address as it appears in the regular records of the
Company or SunGard's transfer agent.
11.6 The Committee may agree at any time, upon request of a
Participant, to defer the date on which any payment under an Award shall be
made.
11.7 In any case that a Participant purchases Common Stock under an
Award for a price at least equal to the par value of the Common Stock, the
Committee may determine, in its sole discretion, that such price has been
satisfied by past services rendered by the Participant.
11.8 For the purposes of the Plan and any Award granted hereunder,
unless otherwise determined by the Committee, the term "fair market value" of
Common Stock on or as of a specified date shall mean either (i) in the case of
an Option not granted under a Performance Award, the last sale price (as defined
below in this Section) for one share of Common Stock on the last trading day on
or before the specified date, or, if the foregoing does not apply, the market
value determined by the Committee; or (ii) in the case of an Option granted
under a Performance Award, the average of the last sale prices during the first
ten trading days beginning on or after the specified date, or the average of the
last sale prices during such other period of time beginning on or after the
specified date as is determined by the Committee, or, if the foregoing does not
apply, the market value determined by the Committee. "Last sale price" means the
last sale price reported on the New York Stock Exchange or on such other primary
market system or stock exchange on which SunGard's Common Stock is then listed
or admitted to trading.
11.9 Shares may not be issued under the Plan, nor may Awards be
granted under the Plan, at any time that to do so would cause SunGard to violate
the requirements for listing on any securities exchange (e.g., Paragraph 312(b)
of the New York Stock Exchange Listed Company Manual as in effect on June 4,
1999) on which SunGard's securities are listed and with which SunGard wishes to
comply.
THE UNDERSIGNED CERTIFIES THAT THIS PLAN WAS DULY APPROVED BY THE EQUITY
SUBCOMMITTEE OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF SUNGARD
DATA SYSTEMS INC., AND WAS DULY ADOPTED BY THE BOARD OF DIRECTORS OF SUNGARD
DATA SYSTEMS INC., AT MEETINGS DULY HELD ON FEBRUARY 22, 2000.
/s/ Lawrence A. Gross
_______________________________________
LAWRENCE A. GROSS, GENERAL COUNSEL AND
SECRETARY OF SUNGARD DATA SYSTEMS INC.
13.
<PAGE>
Exhibit 10.20
SunGard Data Systems Inc.
Summary Description of the Company's
Annual Executive Incentive Compensation Program
SunGard Data Systems Inc. has an annual executive incentive compensation ("EIC")
program for its executive officers and other key management employees. The
principal purpose of this program is to link a significant portion of annual
cash compensation to financial results and other goals, so as to reward
successful performance.
Each participant's EIC program contains certain financial and/or business goals
as targets. These targets are established at the beginning of each year and
take into account the Company's overall financial and business goals for the
year. The EIC program for corporate officers is based primarily upon targeted
rates of increase in the Company's earnings per share over the previous year or
budgeted operating income of the business units that report to the officer.
Sometimes, there are additional performance goals specific to the officer's
function. For other key management employees, the EIC program targets are based
upon financial and/or business goals related to the business units they manage
and, sometimes, additional performance goals specific to their individual
functions.
Generally, the EIC programs contain an incentive compensation amount related to
each target. If the target is achieved, then the related incentive compensation
amount is earned. For most financial goals, there are three to four designated
targets. If the actual result is less than the minimum target, then no
incentive amount is earned. If the actual result is between two targets, then
the incentive amount earned is calculated by interpolation. If the actual
result is more than the maximum target, then the incentive amount earned is
equal to the amount related to the maximum target plus, in some cases, an
additional incentive amount based upon the extent to which the maximum target
was exceeded.
<PAGE>
Exhibit 10.21
SunGard Data Systems Inc.
Summary Description of the Company's
Long-Term Executive Incentive Compensation Plan
SunGard Data Systems Inc. has a long-term incentive compensation plan for its
executive officers and other key management employees. The principal purposes
of this plan are to further align the interests of the executives and key
employees with those of the Company's stockholders and to further reward
successful performance.
The plan currently involves the grant of performance accelerated stock options
("PASOs") to purchase shares of the Company's common stock. PASOs are
nonqualified options (i.e., will not qualify as incentive stock options for tax
purposes) that are granted annually at the beginning of a three-year performance
period and have a term of ten years beginning on the date of grant. Shares vest
under PASOs nine and one-half years after the date of grant, except that vesting
may be accelerated in part or in full at the end of the three-year performance
period to the extent certain financial performance goals are met. In addition,
if performance goals for the three-year performance period are exceeded, the
recipient will receive additional cash compensation upon the completion of the
three-year performance period.
The number of option shares granted to each participant under a PASO is
determined on the basis of an analysis of competitive equity compensation
programs, and is subject to subjective adjustments based upon individual
factors. The financial performance goals for each PASO are based upon the
cumulative growth, during the three-year period covered by the PASO, in the
operating income of the business unit(s) managed by the participant, with the
growth targets for all PASOs, taken together, being consistent with the
Company's overall growth objectives.
The Company currently plans, but will have no legal obligation or commitment, to
continue granting such PASOs (or comparable awards) on an annual basis, subject
to approval by the Equity Award Subcommittee of the Compensation Committee of
the Company's Board of Directors.
<PAGE>
Exhibit 13.1
Portions of the SunGard's Annual Report to Stockholders
for the fiscal year ended December 31, 1999
SunGard (NYSE:SDS) is a global leader in integrated IT solutions and eProcessing
for financial services. SunGard is also the pioneer and a leading provider of
high-availability infrastructure for business continuity. With annual revenues
in excess of $1 billion, SunGard serves more than 10,000 clients in over 50
countries, including 47 of the world's 50 largest financial services
institutions.
financial highlights
- --------------------
As Originally Reported (1)
[GRAPH]
Revenues in Millions of Dollars
$533 $670 $862 $1,160 $1,393
1995 1996 1997 1998 1999
[GRAPH]
Adjusted Net Income in Millions of Dollars
$53 $68 $87 $129 $171
1995 1996 1997 1998 1999
[GRAPH]
Adjusted Diluted Net Income
per Share in Dollars (4)
$0.67 $0.79 $0.97 $1.19 $1.37
1995 1996 1997 1998 1999
Restated (2)
[GRAPH]
Revenues in Millions of Dollars
$655 $810 $1,038 $1,312 $1,445
1995 1996 1997 1998 1999
[GRAPH]
Adjusted Pro Forma Net Income
in Millions of Dollars (5)(6)
$60 $82 $102 $140 $172
1995 1996 1997 1998 1999
[GRAPH]
Adjusted Pro Forma Diluted Net Income
per Share in Dollars (4)(5)(6)
$0.56 $0.71 $0.85 $1.11 $1.32
1995 1996 1997 1998 1999
selected financial information (2)
- ----------------------------------
<TABLE>
<CAPTION>
(in thousands, except per-share amounts) 1995 1996 1997 1998 1999
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income Statement Data (3)(4)
Revenues $654,905 $810,067 $1,037,639 $1,312,248 $1,444,501
Income from operations 91,015 79,811 154,274 214,904 175,915
Pro forma net income before
extraordinary items (5) 54,344 70,380 92,902 127,308 100,531
Pro forma net income (5) 54,344 70,380 92,902 130,382 111,201
Pro forma basic net income per share
before extraordinary items 0.54 0.64 0.80 1.06 0.79
Pro forma diluted net income per share
before extraordinary items 0.51 0.61 0.77 1.01 0.77
Pro forma basic net income per share 0.54 0.64 0.80 1.08 0.88
Pro forma diluted net income per share 0.51 0.61 0.77 1.04 0.85
Adjusted pro forma net income (6) 59,858 82,373 102,448 139,677 171,840
Adjusted pro forma diluted net income
per share (6) 0.56 0.71 0.85 1.11 1.32
Balance Sheet Data
Total assets $691,054 $843,283 $973,405 $1,214,192 $1,564,762
Total short-term and long-term debt 23,226 51,083 32,058 27,158 13,272
Stockholders' equity 469,894 576,168 688,126 840,447 1,210,767
</TABLE>
(1) All periods are as originally reported, which excludes the effects of
restatements resulting from certain pooling-of-interests transactions.
Results of companies acquired in pooling-of-interests transactions are
included from the beginning of the quarter in which the acquisitions were
completed. All periods exclude all items in footnote 3 below.
(2) All periods are restated for certain poolings of interests. See Notes 1 and
2 of Notes to Consolidated Financial Statements.
(3) 1995 includes after-tax merger and preferred stock redemption costs of
$5,514 ($0.05 per diluted share). 1996 includes charges for purchased
in-process research and development and merger costs of $51,083 ($33,468
after tax; $0.29 per diluted share) and an after-tax capital gain resulting
from the sale of an investment by Oshap Technologies Ltd. (Oshap) of
$21,475 ($0.19 per diluted share). 1997 includes charges for purchased
in-process research and development and merger costs of $13,669 ($9,546
after tax; $0.08 per diluted share). 1998 includes merger and restructuring
costs of $14,584 ($12,369 after tax; $0.10 per diluted share) and after-tax
extraordinary gains resulting from Oshap's early retirement of debt of
$3,074 ($0.02 per diluted share). 1999 includes merger costs of $99,184
($71,309 pro forma after tax; $0.55 per pro forma diluted share) and
extraordinary gains of $16,766 ($10,670 after tax; $0.08 per diluted
share) resulting from the sale of two wholly owned healthcare information
systems businesses and from Oshap's early retirement of debt. See Note 2 of
Notes to Consolidated Financial Statements.
(4) All per-share amounts are adjusted for July 1995 and September 1997
two-for-one stock splits.
(5) Includes a charge for pro forma income taxes related to the acquisition of
Automated Securities Clearance, Ltd. See Note 1 of Notes to Consolidated
Financial Statements.
(6) Excludes all items described in footnote 3 above.
<PAGE>
quarterly financial information (unaudited)
- -------------------------------------------
<TABLE>
<CAPTION>
first second third fourth
(in thousands, except per-share amounts) quarter quarter quarter quarter
----------------------------------------------------------
<S> <C> <C> <C> <C>
1999(1)(2)
Revenues $351,647 $352,873 $351,679 $388,302
Income (loss) before income taxes and
extraordinary items (20,041) 65,642 64,389 80,466
Pro forma net income (loss)(3) (8,777) 37,246 34,742 47,990
Pro forma diluted net income (loss)
per common share(4) (0.07) 0.29 0.27 0.37
------------------------------------------------------------
1998(5)(6)
Revenues $298,433 $317,540 $329,892 $366,383
Income before income taxes and
extraordinary items 42,988 54,300 57,892 67,068
Pro forma net income(3) 23,720 31,653 35,699 39,310
Pro forma diluted net income
per common share(4) 0.19 0.25 0.28 0.31
</TABLE>
(1) Includes after-tax merger costs and extraordinary items of $48,114, $3,787
and $8,738 during the first, second and third quarters, respectively
($0.39, $0.03 and $0.07 per diluted share, respectively). See Note 2 of
Notes to Consolidated Financial Statements.
(2) First quarter of 1999 is restated for 1999 poolings of interests with FDP
Corp. (FDP), Oshap Technologies Ltd. (Oshap) and Pentamation Enterprises,
Inc. (PEI). Second quarter of 1999 is restated for 1999 poolings of
interests with Oshap and PEI. See Note 2 of Notes to Consolidated Financial
Statements.
(3) Includes a charge for pro forma income taxes related to the acquisition of
Automated Securities Clearance, Ltd. (ASC). See Note 1 of Notes to
Consolidated Financial Statements.
(4) Due to rounding during each quarter, the sum of the quarters may not be
equal to the full-year total.
(5) Includes after-tax merger costs and extraordinary items of $7,048, $2,403,
$203 and $(359) during the first through fourth quarters, respectively
($0.06 and $0.02 per diluted share for the first and second quarters,
respectively, and, for both the third and fourth quarters, less than $0.01
per diluted share). See Note 2 of Notes to Consolidated Financial
Statements.
(6) All quarters in 1998 are restated for poolings of interests with ASC, FDP,
Oshap, PEI and Sterling Wentworth Corporation. See Note 2 of Notes to
Consolidated Financial Statements.
stock information
- -----------------
The common stock of SunGard Data Systems Inc. (the Company) is listed on the New
York Stock Exchange under the symbol SDS. At March 10, 2000, the Company had
approximately 5,400 stockholders of record. No dividends have ever been paid on
the Company's common stock. The Company's policy is to retain earnings for use
in its business.
The accompanying table indicates high and low sales prices per share of the
Company's common stock, as reported on the New York Stock Exchange.
Calendar Year 1999
First Quarter $41 15/16 $32 7/8
Second Quarter 39 15/16 27 9/16
Third Quarter 36 5/8 21 3/8
Fourth Quarter 26 3/16 16 7/8
Calendar Year 1998
First Quarter $37 3/8 $28 1/16
Second Quarter 40 31 7/16
Third Quarter 40 31 1/4
Fourth Quarter 39 11/16 21 11/16
The closing price of the Company's common stock on March 10, 2000, as reported
on the New York Stock Exchange, was $31 per share.
<PAGE>
management's discussion and analysis of financial condition and results of
operations
- --------------------------------------------------------------------------
Statements about the outlook of SunGard Data Systems Inc. (the Company) and all
other statements in this Annual Report other than historical facts are
forward-looking statements. Since these statements involve risks and
uncertainties and are subject to change at any time, actual results could differ
materially from expected results. Forward-looking statements include information
about possible or assumed future financial results of the Company. The Company
derives most of its forward-looking statements from its operating budgets and
forecasts, which are based upon many detailed assumptions. While the Company
believes that its assumptions are reasonable, it cautions that there are
inherent difficulties in predicting certain important factors, such as the
timing and magnitude of software sales, the timing and scope of technological
advances, the integration and performance of acquired businesses, the prospect
of future acquisitions, the ability to attract and retain key personnel, the
effect of year 2000 issues on software and services buying decisions, and the
overall condition of the financial services industry. These factors, as and when
applicable, are discussed in the Company's filings with the Securities and
Exchange Commission, including its Form 10-K for the year ended December 31,
1999, a copy of which may be obtained from the Company without charge.
During 1999, the Company completed certain acquisitions accounted for as
poolings of interests, which required restatement of prior-period results.
During 1999, 1998 and 1997, the Company recorded merger costs associated with
acquired companies. On March 31, 1999, the Company sold two of its three wholly
owned healthcare information systems (HIS) businesses, resulting in an
extraordinary gain. See Notes 1 and 2 of Notes to Consolidated Financial
Statements.
Results of Operations
The following table sets forth, for the periods indicated, certain amounts
included in the Company's Consolidated Statements of Income, the relative
percentage that those amounts represent to consolidated revenues (unless
otherwise indicated), and the percentage change in those amounts from period to
period. This information should be read along with the Consolidated Financial
Statements and Notes thereto.
<TABLE>
<CAPTION>
year ended December 31, percent of revenues (1) percent
(in millions) year ended December 31, increase (decrease)(1)
1999 1998
1999 1998 1997 1999 1998 1997 vs.1998 vs.1997
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Investment support systems $1,052.4 $ 957.4 $ 741.6 73% 73% 72% 10% 29%
Business continuity and Internet services 357.9 302.5 253.5 25 23 24 18 19
Other businesses 34.2 52.3 42.5 2 4 4 (35) 23
-------------------------------------------------------------
$1,444.5 $1,312.2 $1,037.6 100% 100% 100% 10 26
=============================================================
Costs and Expenses
Cost of sales and direct operating $ 605.0 $ 544.9 $ 428.0 42% 42% 41% 11% 27%
Sales, marketing and administration 310.8 292.6 235.3 22 22 23 6 24
Product development 131.5 129.3 103.7 9 10 10 2 25
Depreciation and amortization 76.9 71.5 64.6 5 6 6 8 11
Amortization of acquisition-related
intangible assets 45.2 44.4 38.0 3 3 4 2 17
Merger costs, including noncash charge
of $71.5 in 1999 99.2 14.6 13.7 7 1 1 -- --
-------------------------------------------------------------
$1,268.6 $1,097.3 $ 883.3 88% 84% 85% 16 24
=============================================================
Operating Income
Investment support systems(2) $ 189.8 $ 166.0 $ 121.9 18% 17% 16% 14% 36%
Business continuity and Internet services(2) 94.4 72.1 56.5 26 24 22 31 28
Other businesses(2) 5.0 5.3 3.1 15 10 7 (5) 72
Corporate administration (14.1) (13.9) (13.5) (1) (1) (1) 2 3
-----------------------------------
275.1 229.5 168.0 19 17 16 20 37
Merger costs, including noncash charge
of $71.5 in 1999 (99.2) (14.6) (13.7) (7) (1) (1) -- --
-----------------------------------
$ 175.9 $ 214.9 $ 154.3 12 16 15 (18) 39
===================================
</TABLE>
(1) All percentages are calculated using actual amounts rounded to the nearest
$1,000.
(2) Percent of revenues is calculated as a percent of investment support
systems revenues, business continuity and Internet services revenues, and
revenues from other businesses, respectively.
<PAGE>
Income from Operations
The Company sells a significant portion of its products and services to the
financial services industry and could be affected directly by the overall
condition of that industry. The Company expects that the consolidation trend in
the financial services industry will continue, but it is unable to predict what
effect, if any, this trend may have on the Company.
Certain investment support systems (ISS) companies acquired during 1999 and
1998 derive a significantly larger portion of revenues from software license
sales than the Company's other ISS businesses. Since there are inherent
difficulties in predicting the timing and magnitude of software sales, the
potential for fluctuations in quarterly revenues and income is greater than it
was before these acquisitions were completed.
Investment Support Systems (ISS)
The Company's ISS business is comprised of fourteen groups of related
financial services software businesses. Historically, most of these businesses
have met or exceeded expectations, while some have not, yielding overall results
for the entire business at approximately the levels expected. During 1999,
overall results were below expectations due primarily to a 36% decrease in
software license and third-party fees in four of the Company's derivatives and
risk management systems businesses. The Company's other ISS businesses performed
well overall, but their results did not fully offset the decrease in software
license and third-party fees within the four affected businesses. The Company
believes that much of the decrease is due to a slowdown in new system purchases
by both large and medium-size financial institutions resulting from the
industry's focus on Y2K testing and preparation during 1999. Software license
and third-party fees of the four affected businesses are $78.5 million, $122.1
million and $108.5 million in 1999, 1998 and 1997, respectively.
The ISS operating margin is 18% in 1999, compared with 17% in 1998 and 16%
in 1997. Despite the offsetting impact of lower license fees in the four
derivatives and risk management businesses, the higher margin in 1999 is due to
lower operating costs in these same four businesses, an increase in license fees
in other ISS businesses, improved margins for Automated Securities Clearance,
Ltd. (ASC) and Oshap Technologies Ltd. (Oshap), and lower compensation expense
associated with the Company's long-term equity incentive plans. The higher
margin in 1998 compared to 1997 is due primarily to an increase in software
license and third-party fees, as well as to a reduction in costs in three ISS
businesses.
The Company expects that the full-year 2000 ISS operating margin will
increase slightly from the full-year 1999 operating margin. The most important
factors affecting the ISS operating margin continue to be the timing and
magnitude of software license sales, the operating margins of recently acquired
businesses and the level of product development spending.
Business Continuity and Internet Services (BCIS)
BCIS provides business continuity, Web-hosting, co-location, outsourcing and
remote-access computer services. The BCIS operating margin is 26% in 1999,
compared with 24% in 1998 and 22% in 1997. The increasing operating margins are
due primarily to increases in revenues, including additional Y2K testing revenue
and, in 1999, the favorable settlement of a contract dispute and lower
compensation expense associated with the Company's long-term equity incentive
plans. The increasing operating margin in 1999 and 1998 is net of the impact of
equipment additions and upgrades, increases in commission expense resulting from
new contract signings and, in 1999, severance costs.
The Company expects that the full-year 2000 BCIS operating margin will
decline slightly from the full-year 1999 operating margin as customer testing
returns to pre-Y2K levels and the Company makes additional investments in its
new Web-hosting and co-location offerings. The most important factors affecting
the BCIS operating margin continue to be the rate of new contract signings and
contract renewals and the timing and magnitude of equipment and facilities
expenditures.
Revenues
Total revenues increased $132.3 million and $274.6 million in 1999 and 1998,
respectively. Excluding acquired businesses and the 1999 sale of the HIS
businesses, total revenues increased approximately 10% and 18% in 1999 and 1998,
respectively.
The slower revenue growth rate in 1999 is due primarily to lower
derivatives and risk management software license revenues, lower professional
services revenues resulting from shareholder accounting system conversions being
completed in late 1998 and early 1999 and, to a lesser extent, a decline in
revenues resulting from the sale of the HIS businesses.
Recurring revenues derived from processing services, business continuity
and Internet services, professional services, software maintenance, and software
and hardware rentals are $1.2 billion, $1.0 billion and $0.8 billion in 1999,
1998 and 1997, respectively, representing 83%, 79% and 79% of consolidated
revenues, respectively, for those years. The increase in recurring revenues is
due primarily to an increase in revenues from business continuity and Internet
services and to an increase in revenues from the Company's brokerage systems
business. Professional services revenues are $268.6 million in 1999, compared to
$239.0 million and $149.9 million in 1998 and 1997, respectively. The 1999
increase in professional services revenues is due primarily to both the addition
of professional services revenues of acquired businesses and an increase in
brokerage systems professional services, and is net of the impact of shareholder
accounting system conversions being completed in late 1998 and early 1999 and a
decline in revenues resulting from the sale of the HIS businesses. The 1998
increase in professional services revenues is primarily the result of an
increased emphasis on professional services opportunities in many of the
Company's businesses and shareholder accounting systems conversions that were
completed in late 1998 and early 1999.
Nonrecurring revenues, derived from software licenses and sales of
third-party software and hardware, are $239.1 million in 1999, compared to
$271.3 million and $219.5 million in 1998 and 1997, respectively. Lower revenues
from third-party software and hardware sales are due primarily to a decline in
sales of hardware related to large systems installations in 1998 in the public
sector and trust and custody software businesses and a decline in revenues
resulting from the sale of the HIS businesses.
Software license revenues included in license and third-party fees are
$208.2 million, $219.5 million and $185.9 million in 1999, 1998 and 1997,
respectively. Lower software license revenues in 1999 are due primarily to both
a decline in derivatives and risk management software license revenues and the
absence of software license revenues associated with the sale of the HIS
businesses, and are offset in part by the addition of revenues from acquired
businesses. Higher software license revenues in 1998 compared to 1997 are due
primarily to an increase in derivatives and risk management software license
revenues and the addition of revenues from acquired businesses.
Investment Support Systems
ISS revenues increased $95.0 million, or 10%, and $215.8 million, or 29%, in
1999 and 1998, respectively. In 1999, recurring ISS revenues increased $118.8
million, while nonrecurring ISS revenues decreased $23.8 million. In 1998,
recurring ISS revenues increased $168.1 million, while nonrecurring ISS revenues
increased $47.7 million. Excluding acquired businesses, ISS revenues increased
approximately 8% and 18% in 1999 and 1998, respectively. Excluding from all
periods the four derivatives and risk management businesses that experienced a
decrease in software license and third-party fees, ISS revenues increased
approximately 19%, 32% and 31% in 1999, 1998 and 1997, respectively.
Business Continuity and Internet Services
BCIS revenues increased $55.4 million, or 18%, and $49.0 million, or 19%, in
1999 and 1998, respectively. The increases are attributable primarily to new
contract signings and contract renewals, continued growth in demand for midrange
platforms, network services and work-group recovery, increases in business
continuity professional services and software licenses and, in 1998, an increase
in revenues from government contracts in the computer outsourcing and processing
business.
Other Businesses
The Company's remaining businesses (Other Businesses) consist of an HIS
business, which provides work-flow management systems to healthcare insurance
organizations, and an automated mailing-services business. Revenues from Other
Businesses decreased $18.1 million, or 35%, in 1999 and increased $9.8 million,
or 23%, in 1998. Excluding the 1999 sale of the HIS businesses, 1999 revenues
decreased approximately 10%. The decrease is due to lower revenues in both the
HIS and automated mailing-services businesses. The 1998 increase is attributable
to higher revenues in the HIS businesses and is net of the impact of lower
revenues in the automated mailing-services business.
<PAGE>
Costs and Expenses
Cost of sales and direct operating expenses increased $60.2 million and $116.8
million in 1999 and 1998, respectively. The increases are due primarily to BCIS
and ISS equipment upgrades, BCIS facilities improvements and to the costs
associated with acquired businesses. The increase in 1999 is net of the impact
of lower costs resulting from the sale of the HIS businesses.
Sales, marketing and administration expenses increased $18.2 million and
$57.4 million in 1999 and 1998, respectively. The 1999 increases are due
primarily to the additional expenses of acquired businesses and BCIS severance
costs, and are net of the impact of a $13.9 million reduction in expense
associated with the Company's long-term equity incentive plans, a favorable
settlement of a BCIS contract dispute and lower costs resulting from the sale of
the HIS businesses. The 1998 increases are due primarily to additional expenses
associated with acquired businesses, expansion of the sales force, particularly
the BCIS sales force, and an $8.0 million increase in expenses associated with
the Company's long-term equity incentive plans. Total compensation expense
related to all of the Company's equity incentive plans was $0.3 million, $14.2
million and $6.2 million in 1999, 1998 and 1997, respectively.
Product development expenses increased $2.1 million and $25.6 million in
1999 and 1998, respectively. The 1999 increase is due primarily to the addition
of expenses associated with acquired businesses and is net of a decline in
development spending associated with derivatives and risk management systems and
lower costs resulting from the sale of the HIS businesses. The 1998 increase is
the result of the addition of expenses of acquired businesses and increased
development spending for various ISS products. Development costs capitalized are
$4.8 million, $8.0 million and $5.6 million in 1999, 1998 and 1997,
respectively.
Depreciation and amortization of property and equipment increased $5.4
million and $6.8 million in 1999 and 1998, respectively. The increases are due
primarily to purchases of computer and telecommunications equipment, BCIS
facilities improvements, and depreciation and amortization associated with
acquired businesses.
Amortization of acquisition-related intangible assets increased $0.8
million and $6.4 million in 1999 and 1998, respectively. The increases are due
to recently acquired businesses and are net of the impact of intangible assets
of previously acquired businesses having been fully amortized.
As explained in Note 2 of Notes to Consolidated Financial Statements, the
Company recorded merger costs of $99.2 million ($0.55 per pro forma diluted
share) in 1999 and $14.6 million ($0.10 per diluted share) in 1998 and recorded
merger and other acquisition-related costs of $13.7 million ($0.08 per diluted
share) in 1997. Also, the Company recorded extraordinary gains in 1999 and 1998
of $10.7 million ($0.08 per diluted share) and $3.1 million ($0.02 per diluted
share), respectively. The extraordinary gains are related to the sale of the HIS
businesses and Oshap's early retirement of debt (see Note 2 of Notes to
Consolidated Financial Statements).
Net interest income increased $7.2 million and $3.9 million in 1999 and
1998, respectively. The increases are due to higher cash and short-term
investment balances. There were no borrowings under the Company's line of credit
during 1999 or 1998.
The Company's effective income tax rates are 59.6%, 41.5% and 39.9% in
1999, 1998 and 1997, respectively. The increase in the 1999 rate is due to
certain merger costs being nondeductible, including a $71.5 million noncash
charge related to the acquisition of ASC (see Note 2 of Notes to Consolidated
Financial Statements). The 1998 increase is also due to an increase in
nondeductible merger costs and higher costs associated with nondeductible
intangible assets. Excluding these nondeductible costs, as well as the effect of
extraordinary items, the Company's 1999, 1998 and 1997 effective income tax
rates are 40.5%, 40.4% and 39.1%, respectively. The lower effective tax rate in
1997 is due primarily to the effect of the merger with ASC.
Liquidity and Capital Resources
The Company's financial condition and balance sheet remain strong. At December
31, 1999, cash and short-term investments are $391.2 million, an increase of
$100.2 million from December 31, 1998 after spending $96.8 million on acquired
businesses and receiving $25.0 million from the sale of the HIS businesses. Cash
flow from operations exceeded $263.0 million in 1999 and is expected to be in
excess of that amount in 2000. Short- and long-term debt declined from $27.2
million at December 31, 1998 to $13.3 million at December 31, 1999.
Stockholders' equity exceeded $1.0 billion for the first time, reaching $1.2
billion at December 31, 1999.
At December 31, 1999, the Company's remaining commitments consist primarily
of operating leases for computer equipment and facilities aggregating $234.9
million, of which $71.4 million will be paid in 2000. The Company expects that
its existing cash resources and cash generated from operations for the
foreseeable future will be sufficient to meet its operating requirements,
contingent payments in connection with business acquisitions and ordinary
capital spending needs. Furthermore, the Company has a $150.0 million credit
agreement and believes that it has the capacity to secure additional credit or
issue equity to finance additional capital needs.
Effect of Year 2000
The Company's comprehensive program to evaluate and address the impact of the
year 2000 on its software systems, processing services and business continuity
and Internet operations was completed by year end, and the Company's systems and
operations completed the rollover to year 2000 without significant incident.
This program encompassed the Company's products that are sold to its customers,
as well as third-party products that are resold to customers or are used
internally by the Company. The Company continues to monitor the effect that year
2000 may have on its products.
The Company believes that year 2000 compliance concerns caused some decline
in software buying and conversion activity during the last half of 1999,
especially in derivatives and risk management systems, and that this impact may
continue during the first half of 2000. The Company's rate of internal revenue
growth during the first half of 2000, therefore, may be lower than during the
first half of 1999.
Many third-party hardware, software and other products interact with the
Company's products and services or are used by the Company as an integral part
of its operations. The Company continues to monitor these third-party products
for year 2000 compliance, so that noncompliant products may be modified or
replaced in a timely manner. In doing so, the Company must rely upon its outside
vendors to meet continued year 2000 requirements. If any of the Company's
important vendors fails to continue to meet its year 2000 requirements, the
Company will switch to another vendor as soon as possible; this may have a
material adverse impact on the Company's business and financial results.
Although the Company believes that all of its important vendors are meeting
their year 2000 requirements, the Company cannot determine at this time whether
or when year 2000 related problems will arise with its third-party products or
whether any problems that do arise will have a material adverse impact on the
Company's business or financial results.
The Company does not maintain detailed accounting records that separately
identify all of the costs associated with its year 2000 activities. In response
to disclosure requirements regarding year 2000 matters, the Company has reviewed
its accounting and product development records for the period beginning January
1, 1996 in an effort to estimate the costs of its year 2000 compliance program.
Through December 31, 1999, the Company has spent approximately $28.2 million in
direct labor and benefit costs for modification and testing, plus approximately
$7.5 million in capital expenditures. The Company does not expect to incur
significant incremental expenses in 2000.
<PAGE>
consolidated statements of income
- ---------------------------------
<TABLE>
<CAPTION>
year ended December 31,
(in thousands, except per-share amounts) 1999 1998 1997
----------------------------------------------
<S> <C> <C> <C>
Revenues:
Services $1,205,380 $1,040,938 $ 818,166
License and third-party fees 239,121 271,310 219,473
----------------------------------------------
1,444,501 1,312,248 1,037,639
----------------------------------------------
Costs and expenses:
Cost of sales and direct operating 605,045 544,863 428,047
Sales, marketing and administration 310,830 292,650 235,253
Product development 131,482 129,353 103,745
Depreciation and amortization 76,843 71,453 64,624
Amortization of acquisition-related intangible assets 45,202 44,441 38,027
Merger costs, including noncash charge of $71,459 in 1999 (see Note 2) 99,184 14,584 13,669
----------------------------------------------
1,268,586 1,097,344 883,365
----------------------------------------------
Income from operations 175,915 214,904 154,274
Interest income 16,862 9,742 6,620
Interest expense (2,321) (2,398) (3,213)
----------------------------------------------
Income before income taxes and extraordinary items 190,456 222,248 157,681
Income taxes 117,306 93,546 62,947
----------------------------------------------
Income before extraordinary items 73,150 128,702 94,734
Extraordinary items, net of income taxes of $6,096 in 1999 10,670 3,074 --
----------------------------------------------
Net income 83,820 131,776 94,734
Pro forma income tax expense (benefit) related to acquired
Subchapter S corporation (27,381) 1,394 1,832
----------------------------------------------
Pro forma net income $ 111,201 $ 130,382 $ 92,902
==============================================
Pro forma basic net income per common share:
Before extraordinary items $ 0.79 $ 1.06 $ 0.80
==============================================
After extraordinary items $ 0.88 $ 1.08 $ 0.80
==============================================
Shares used to compute basic net income
per common share 126,949 120,350 115,627
==============================================
Pro forma diluted net income per common share:
Before extraordinary items $ 0.77 $ 1.01 $ 0.77
==============================================
After extraordinary items $ 0.85 $ 1.04 $ 0.77
==============================================
Shares used to compute diluted net income
per common share 130,195 125,455 120,687
==============================================
</TABLE>
consolidated balance sheets
- ---------------------------
<TABLE>
<CAPTION>
December 31,
(in thousands, except per-share amounts) 1999 1998
----------------------------
<S> <C> <C>
Assets
Current:
Cash and equivalents $ 286,990 $ 265,011
Short-term investments 104,235 26,001
Trade receivables, less allowance for doubtful accounts of $34,141 and $28,988 278,114 269,729
Earned but unbilled receivables 56,288 42,830
Prepaid expenses and other current assets 35,615 36,106
Deferred income taxes 25,565 22,208
----------------------------
Total current assets 786,807 661,885
Investment in common stock 49,902 16,251
Property and equipment, less accumulated depreciation of $318,405 and $267,220 182,682 149,334
Software products, less accumulated amortization of $146,185 and $123,220 110,355 83,929
Goodwill, less accumulated amortization of $59,840 and $49,010 211,791 161,404
Other tangible and intangible assets, less accumulated amortization of $77,740 and $60,814 93,393 102,063
Deferred income taxes 129,832 39,326
----------------------------
$1,564,762 $1,214,192
============================
Liabilities and Stockholders' Equity
Current:
Short-term and current portion of long-term debt $ 7,755 $ 17,310
Accounts payable 14,924 21,256
Accrued compensation and benefits 84,971 96,371
Other accrued expenses 61,820 56,358
Accrued income taxes 13,142 22,947
Deferred revenues 165,866 149,655
----------------------------
Total current liabilities 348,478 363,897
----------------------------
Long-term debt 5,517 9,848
----------------------------
Commitments (see Note 11)
Stockholders' equity:
Preferred stock, par value $.01 per share; 5,000 shares authorized -- --
Common stock, par value $.01 per share; 320,000 shares authorized;
128,505 and 122,602 shares issued 1,285 1,226
Capital in excess of par value 591,998 316,922
Restricted stock plans and notes receivable from common stock (1,768) (3,129)
Retained earnings 608,519 536,523
Accumulated other comprehensive income (loss) 10,733 (7,299)
----------------------------
1,210,767 844,243
Treasury stock, at cost, 0 and 641 shares -- (3,796)
----------------------------
Total stockholders' equity 1,210,767 840,447
----------------------------
$1,564,762 $1,214,192
============================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
consolidated statements of cash flows
- -------------------------------------
<TABLE>
<CAPTION>
year ended December 31,
(in thousands) 1999 1998 1997
------------------------------------------
<S> <C> <C> <C>
Cash Flow From Operations
Net income $ 83,820 $131,776 $ 94,734
Reconciliation of net income to cash flow from operations:
Depreciation and amortization 122,045 115,894 102,651
Extraordinary gains, net of income taxes (10,670) (3,074) --
Noncash compensation charge related to the acquisition of ASC 71,459 -- --
Other noncash charges including purchased in-process
research and development in 1997 4,860 22,270 18,837
Deferred income tax benefit (4,755) (13,817) (15,840)
Accounts receivable and other current assets (15,451) (73,621) (47,544)
Accounts payable and accrued expenses 1,014 50,804 15,893
Deferred revenues 10,876 18,779 2,225
------------------------------------------
Cash flow from operations 263,198 249,011 170,956
------------------------------------------
Financing Activities
Cash received from employee stock plans and issuance of
common stock 40,514 28,386 14,381
Cash received from borrowings 4,856 5,700 171,752
Pre-acquisition cash distributions to shareholders of acquired
corporations, net (5,605) (9,655) (4,405)
Cash received by consolidated subsidiary from issuing shares to
minority owners -- 8,500 --
Cash paid for treasury stock -- (871) (525)
Cash paid to repay debt (26,445) (13,684) (197,152)
------------------------------------------
Total financing activities 13,320 18,376 (15,949)
------------------------------------------
Investment Activities
Cash paid for acquired businesses, net of cash acquired (96,763) (26,121) (56,009)
Cash paid for property and equipment (95,829) (73,253) (64,108)
Cash paid for software and other assets (16,489) (14,691) (13,598)
Cash paid for purchases of short-term investments (93,018) (21,661) (79,902)
Cash received from sale of subsidiaries 25,000 -- --
Cash received from sales and maturities of short-term investments 22,560 42,434 54,334
------------------------------------------
Total investment activities (254,539) (93,292) (159,283)
------------------------------------------
Increase (decrease) in cash and equivalents 21,979 174,095 (4,276)
Beginning cash and equivalents 265,011 90,916 95,192
------------------------------------------
Ending cash and equivalents $ 286,990 $265,011 $ 90,916
==========================================
Supplemental Information
Interest paid $ 2,310 $ 2,808 $ 3,413
==========================================
Income taxes paid $ 114,872 $ 81,227 $ 73,720
==========================================
Acquired businesses:
Property and equipment $ 3,142 $ 1,312 $ 5,681
Software products 41,676 6,409 17,765
Purchased in-process research and development -- -- 10,161
Goodwill and other intangible assets 82,867 27,737 34,445
Deferred income taxes 100,774 233 1,738
Purchase price obligations and debt assumed (8,077) (3,021) (6,406)
Net current assets acquired (liabilities assumed) 619 (12,362) (954)
Common stock issued and net equity acquired in poolings of interests (124,238) 5,813 (6,421)
------------------------------------------
Cash paid for acquired businesses, net of cash acquired of $3,029,
$1,708 and $4,606 in 1999, 1998 and 1997, respectively $ 96,763 $ 26,121 $ 56,009
==========================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
consolidated statement of stockholders' equity
- ----------------------------------------------
<TABLE>
<CAPTION>
preferred stock common stock
------------------- ----------------------
number of par number of par
(in thousands) shares value shares value
--------------------------------------------
<S> <C> <C> <C> <C>
Balances, December 31, 1996, as previously reported -- $-- 48,473 $ 485
Adjustments in connection with poolings of interests -- -- 8,285 82
--------------------------------------------
Balances, December 31, 1996, as restated -- -- 56,758 567
Poolings of interests -- -- 2,796 28
Comprehensive income:
Net income -- -- -- --
Foreign currency translation -- -- -- --
Unrealized gains on short-term investments -- -- -- --
Total comprehensive income
Two-for-one common stock split -- -- 57,814 578
Pre-acquisition contributions (distributions) -- -- -- --
Purchase of common stock -- -- -- --
Note repayments -- -- -- --
Shares issued under stock plans -- -- 1,399 14
Compensation expense related to restricted stock plans -- -- -- --
Options earned under long-term incentive plan -- -- -- --
Income tax benefit arising from employee stock options -- -- -- --
--------------------------------------------
Balances, December 31, 1997 -- -- 118,767 1,187
Poolings of interests -- -- 1,343 13
Comprehensive income:
Net income -- -- -- --
Foreign currency translation -- -- -- --
Unrealized losses on short-term investments -- -- -- --
Total comprehensive income
Stock issued for acquired company -- -- 15 1
Pre-acquisition contributions (distributions) -- -- -- --
Purchase of common stock -- -- -- --
Note repayments, net of issuances -- -- -- --
Shares issued under stock plans -- -- 2,477 25
Compensation expense related to stock plans -- -- -- --
Income tax benefit arising from employee stock options -- -- -- --
--------------------------------------------
Balances, December 31, 1998 -- -- 122,602 1,226
Poolings of interests -- -- 1,837 18
Comprehensive income:
Net income -- -- -- --
Foreign currency translation -- -- -- --
Unrealized gains on short-term investments (net of income taxes of $12,060) -- -- -- --
Total comprehensive income
Deferred income tax benefit resulting from acquisition of ASC -- -- -- --
Noncash compensation expense resulting from acquisition of ASC -- -- -- --
Noncash broker fee in connection with acquisition of ASC -- -- -- --
Purchase of minority interests in MINT and Decalog -- -- 407 4
Pre-acquisition distributions -- -- -- --
Note repayments -- -- -- --
Shares issued under stock plans -- -- 3,659 37
Compensation expense related to stock plans -- -- -- --
Options earned under long-term incentive plan -- -- -- --
Income tax benefit arising from employee stock options -- -- -- --
--------------------------------------------
Balances, December 31, 1999 -- $-- 128,505 $1,285
============================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
accumulated other
comprehensive income (loss) treasury stock
restricted stock -------------------------------------- ------------------------------
capital in plans and notes foreign unrealized gains
excess of receivable from retained currency on marketable number of
par value common stock earnings translation securities shares cost total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$208,082 $(3,428) $301,686 $ (287) $ -- (43) $(1,475) $ 505,063
28,827 (1,448) 45,786 189 69 (271) (2,400) 71,105
- -----------------------------------------------------------------------------------------------------------------------------------
236,909 (4,876) 347,472 (98) 69 (314) (3,875) 576,168
2,574 -- 3,884 (65) -- -- -- 6,421
-- -- 94,734 -- -- -- --
-- -- -- (6,749) -- -- --
-- -- -- -- 24 -- --
88,009
(578) -- -- -- -- (282) -- --
1,631 -- (6,111) -- -- -- -- (4,480)
-- -- -- -- -- (30) (525) (525)
-- 1,074 -- -- -- -- -- 1,074
11,682 -- -- -- -- 54 1,475 13,171
-- 511 -- -- -- -- -- 511
4,230 -- -- -- -- -- -- 4,230
3,547 -- -- -- -- -- -- 3,547
- -----------------------------------------------------------------------------------------------------------------------------------
259,995 (3,291) 439,979 (6,912) 93 (572) (2,925) 688,126
4,357 -- (11,644) (221) -- -- -- (7,495)
-- -- 131,776 -- -- -- --
-- -- -- (168) -- -- --
-- -- -- -- (91) -- --
131,517
912 -- -- -- -- -- -- 913
9,140 -- (23,588) -- -- -- -- (14,448)
-- -- -- -- -- (69) (871) (871)
-- 221 -- -- -- -- -- 221
28,014 (688) -- -- -- -- -- 27,351
1,791 629 -- -- -- -- -- 2,420
12,713 -- -- -- -- -- -- 12,713
- -----------------------------------------------------------------------------------------------------------------------------------
316,922 (3,129) 536,523 (7,301) 2 (641) (3,796) 840,447
3,434 -- (6,219) -- -- 641 3,796 1,029
-- -- 83,820 -- -- -- --
-- -- -- (4,364) -- -- --
-- -- -- -- 22,396 -- --
101,852
103,004 -- -- -- -- -- -- 103,004
71,459 -- -- -- -- -- -- 71,459
3,531 -- -- -- -- -- -- 3,531
23,512 -- -- -- -- -- -- 23,516
-- -- (5,605) -- -- -- -- (5,605)
-- 1,369 -- -- -- -- -- 1,369
39,986 (631) -- -- -- -- -- 39,392
-- 623 -- -- -- -- -- 623
11,043 -- -- -- -- -- -- 11,043
19,107 -- -- -- -- -- -- 19,107
- -----------------------------------------------------------------------------------------------------------------------------------
$591,998 $(1,768) $608,519 $(11,665) $22,398 -- $ -- $1,210,767
===================================================================================================================================
</TABLE>
<PAGE>
notes to consolidated financial statements
- ------------------------------------------
1. Summary of Significant Accounting Policies
Basis of Presentation
SunGard Data Systems Inc. (the Company), through its subsidiaries, provides
integrated technology solutions, principally proprietary software and
application services to the financial services industry and business continuity
and Internet services, comprised of high-availability infrastructure, Web-
hosting, co-location, outsourcing and remote-access computer services. The
consolidated financial statements include the accounts of the Company and its
majority-owned subsidiaries. All significant intercompany transactions and
accounts have been eliminated.
The consolidated financial statements for all periods have been restated
for the poolings of interests with Automated Securities Clearance, Ltd. (ASC),
FDP Corp. (FDP), Oshap Technologies Ltd. (Oshap), Pentamation Enterprises, Inc.
(PEI) and Sterling Wentworth Corporation (SWC). Historical financial information
has not been restated for five other poolings of interests due to immateriality.
Each immaterial acquisition was recorded as of the beginning of the quarter in
which it was completed. See Note 2 of Notes to Consolidated Financial
Statements.
ASC was a Subchapter S corporation before the Company acquired it;
therefore, all income passed through directly to and substantially all income
taxes were paid directly by the former shareholder of ASC. Net income and all
net income per share amounts are presented on a pro forma basis since generally
accepted accounting principles require the presentation of pro forma income tax
expense for ASC as if ASC had been a C corporation for all periods presented.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements, and reported
amounts of revenues and expenses during the reporting period. Future events
could cause actual results to differ from those estimates.
The Company amortizes intangible assets, including software product costs,
over periods that it believes approximate the related useful lives of those
assets based upon estimated future operating results and cash flows of the
underlying business operations. The Company closely monitors estimates of those
lives. Those estimates could change due to numerous factors, including product
demand, market conditions, technological developments, economic conditions and
competitor activities.
Revenue Recognition
Revenues from processing services, business continuity and Internet services and
software maintenance services are recognized over the terms of the related
contracts or as the related services are provided. Revenues from license fees of
proprietary products are generally recognized upon the signing of a contract and
delivery of the product, as long as the fee is considered to be fixed and
determinable and collection is probable.
Revenues from license fees of proprietary products that are paid for over
an extended period of time and are bundled together with computer equipment and
other postdelivery services, and for which significant technology or service
risks exist, are recorded ratably over the contract period. Revenues from
fixed-fee contracts requiring a significant amount of program modification or
customization, installation, systems integration and/or related services are
recognized based upon the estimated percentage of completion. Changes in
estimated costs during the course of a contract are reflected in the period in
which the facts become known.
Cash and Equivalents
Cash equivalents consist of commercial paper and other investments that are
readily convertible into cash and have original maturities of three months or
less.
Short-term Investments
The Company classifies all of its short-term investments as available-for-sale
securities. Short-term investments consist primarily of government agency bonds
and notes and corporate obligations which are stated at market value, with
unrealized gains and losses net of income tax on such securities reflected in
stockholders' equity as a component of other comprehensive income (loss).
Realized gains and losses on short-term investments are included in earnings and
are derived using the specific-identification method for determining cost of
securities. The fair values of investments are determined using quoted market
prices.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of
credit risk consist of temporary cash and short-term investments and
receivables. By policy, the Company places its temporary cash and short-term
investments with institutions of high credit-quality and limits the amount of
credit exposure to any one issuer. The Company sells a significant portion of
its products and services to the financial services industry and could be
affected directly by the overall condition of that industry. The Company
believes that any credit risk associated with receivables is substantially
mitigated by a relatively large number of customer accounts and reasonably short
collection terms. Receivables are stated at estimated net realizable value,
which approximates fair value.
Property and Equipment
Property and equipment are recorded at cost, and depreciation is provided on the
straight-line method over the estimated useful lives of the related assets (two
to eight years for equipment and ten to forty years for buildings and
improvements). Leasehold improvements are amortized ratably over their remaining
lease term or useful life, if shorter.
Foreign Currency Translation
The functional currency of each of the Company's foreign operations is the local
currency of the country in which the operation is headquartered. All assets and
liabilities are translated into U.S. dollars using exchange rates in effect at
the balance sheet date. Revenues and expenses are translated using average
exchange rates during the period. Increases and decreases in net assets
resulting from foreign currency translation are reflected in stockholders'
equity as a component of other comprehensive income (loss).
Investment in Common Stock
Long-term investment in common stock consists of 1.7 million shares of common
stock (approximately 16.5% of the outstanding common stock) of Tecnomatix
Technologies Ltd. (Nasdaq: TCNO). These shares were acquired in connection with
the 1999 acquisition of Oshap (see Note 2 of Notes to Consolidated Financial
Statements). In accordance with Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities," this
investment is classified as available for sale. The investment is stated at
market value, with unrealized gains and losses net of income tax reflected in
stockholders' equity as a component of other comprehensive income (loss). The
fair value of the investment is determined using quoted market prices. Prior to
the Company's acquisition of Oshap, this investment was recorded using the
equity method of accounting.
Software Development and Product Costs
Product development costs are expensed as incurred and consist primarily of
design and development costs of new products and significant enhancements
incurred before the establishment of technological feasibility. In 1999, the
Company recorded an expense of $3.3 million for the impairment of certain
acquired software products.
Costs associated with purchased software, software obtained through
business acquisitions, and new products and enhancements to existing products
that meet technological feasibility and recoverability tests are capitalized and
amortized over the estimated useful lives of the related products, generally
five to ten years, using the straight-line method or the ratio of current
revenues to current and anticipated revenues from such software, whichever
provides the greater amortization. Amortization of all software products
aggregated $27.7 million, $23.5 million and $24.3 million during 1999, 1998 and
1997, respectively.
Goodwill
Goodwill represents the excess of cost over the fair value of net assets
acquired and is amortized using the straight-line method over periods ranging
from five to thirty years. The recoverability of goodwill is periodically
reviewed by the Company. In assessing recoverability, many factors are
considered, including operating results and cash flows of the acquired
businesses, as well as benefits that the acquired businesses contribute to
existing and related products, services and markets. After consideration of
these factors, the Company determines whether a reduction in amortizable life or
charge for impairment is appropriate. The Company believes that no impairment of
goodwill existed at December 31, 1999.
In 1998, the Company recorded a charge of $6.5 million for both the partial
impairment of goodwill associated with a United Kingdom-based investment support
systems processing business and the write-off of the remaining goodwill
associated with an Australia-based investment support systems business.
Other Intangible Assets
Other intangible assets consist primarily of contract rights, customer bases and
noncompetition agreements obtained in business acquisitions. Contract rights and
customer bases are amortized using the straight-line method over their estimated
useful lives, ranging from four to seventeen years. Noncompetition agreements
are amortized using the straight-line method over the term of such agreements,
ranging from two to seven years.
<PAGE>
Income Taxes
The Company recognizes deferred income tax assets and liabilities based upon the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Deferred income tax assets and liabilities
are calculated based on the difference between the financial and tax bases of
assets and liabilities using the currently enacted income tax rates in effect
during the years in which the differences are expected to reverse.
2. Acquisitions and Dispositions
Pooling-of-Interests Transactions
In 1999, the Company completed ten acquisitions in its investment support
systems (ISS) business. A total of 18.8 million shares of common stock were
issued in connection with these acquisitions, and outstanding options to buy
shares of the acquired companies were converted into options to buy 1.6 million
shares of the Company's common stock.
All historical financial information of the Company has been restated to
include the historical financial results of ASC, FDP, Oshap, PEI and SWC.
Historical financial information is not restated for the other acquisitions due
to immateriality. Each immaterial acquisition has been recorded as of the
beginning of the quarter in which it was completed.
A reconciliation of revenues, pro forma net income, before and after
extraordinary items, and pro forma net income per common share, before and after
extraordinary items, from the amounts originally reported to the amounts as
restated for each of the years ended December 31 follows (in thousands, except
per-share amounts):
1999(1) 1998(1) 1997(1)
Revenues:
As originally reported $1,392,998 $1,159,748 $ 925,030
Poolings of interests 51,503 152,500 112,609
----------------------------------------
Combined $1,444,501 $1,312,248 $1,037,639
========================================
Pro forma net income before
extraordinary items:
As originally reported $ 99,921 $ 118,933 $ 83,975
Poolings of interests 610 8,375 8,927
----------------------------------------
Combined $ 100,531 $ 127,308 $ 92,902
========================================
Pro forma net income after
extraordinary items:
As originally reported $ 110,292 $ 118,933 $ 83,975
Poolings of interests 909 11,449 8,927
----------------------------------------
Combined $ 111,201 $ 130,382 $ 92,902
========================================
Pro forma basic net income
per common share before
extraordinary items:
As originally reported $0.82 $1.14 $0.84
========================================
Combined $0.79 $1.06 $0.80
========================================
Pro forma basic net income
per common share after
extraordinary items:
As originally reported $0.90 $1.14 $0.84
========================================
Combined $0.88 $1.08 $0.80
========================================
Pro forma diluted net income
per common share before
extraordinary items:
As originally reported $0.80 $1.10 $0.81
========================================
Combined $0.77 $1.01 $0.77
========================================
Pro forma diluted net income
per common share after
extraordinary items:
As originally reported $0.88 $1.10 $0.81
========================================
Combined $0.85 $1.04 $0.77
========================================
(1) The 1999 combined amounts include revenues, pro forma net income and pro
forma net income per common share for each of the quarters prior to the
consummation of the mergers with FDP, completed during the second quarter,
and Oshap and PEI, completed during the third quarter. The mergers with ASC
and SWC were completed during the first quarter. The 1998 and 1997 combined
amounts include ASC, FDP, Oshap, PEI and SWC for all periods.
In 1998, the Company completed three ISS acquisitions. A total of 14.6
million shares of common stock were issued in connection with these
acquisitions, and outstanding options to buy shares of the acquired companies
were converted into options to buy 1.7 million shares of the Company's common
stock.
All historical financial information of the Company was restated in 1998 to
include the historical financial information of Infinity Financial Technology,
Inc. (Infinity). Historical financial information is not restated for the other
acquisitions due to immateriality. Each immaterial acquisition has been recorded
as of the beginning of the quarter in which it was completed.
In 1997, the Company completed six acquisitions. Five of these acquisitions
are in the Company's ISS business and one in its healthcare information systems
(HIS) business. A total of 3.7 million shares of common stock were issued in
connection with these acquisitions, and outstanding options to buy shares of the
acquired companies were converted into options to buy 0.7 million shares of the
Company's common stock. Historical financial information is not restated for
these acquisitions due to immateriality. Each acquisition has been recorded as
of the beginning of the quarter during which it was completed.
Purchase Transactions
During 1999, the Company completed eight ISS acquisitions. The total cash paid
is $98.4 million, subject to certain adjustments. The Company also paid $1.4
million as additional consideration based upon the operating performance of
businesses previously acquired. In conjunction with the Company's pooling of
interests with Oshap, the Company also acquired the minority interests of two
Oshap subsidiaries, MINT Software Technologies Ltd. (MINT) and Decalog N.V.
(Decalog). In addition to the cash paid, the Company also issued 0.4 million
shares of common stock and converted unvested stock options into 0.4 million
options to purchase common stock of the Company. Goodwill recorded in connection
with all of these acquisitions is $64.1 million. Also in connection with these
acquisitions, a total of up to $2.8 million could be paid as additional
consideration contingent upon the future operating performance of certain
acquired businesses.
During 1998, the Company completed six acquisitions, five of which are in
its ISS business and one in its business continuity and Internet services (BCIS)
business. The total cash paid is $16.9 million, subject to certain adjustments.
Goodwill recorded is approximately $6.7 million. The Company also paid $5.0
million as additional consideration based upon the operating performance of
businesses previously acquired.
During 1997, the Company completed five acquisitions, three of which are in
its ISS business and two in its BCIS business. The total cash paid is $58.9
million, subject to certain adjustments. Goodwill recorded is $15.2 million. The
Company also paid $0.7 million as additional consideration based upon the
operating performance of a previously acquired business. Total additional
consideration of $2.2 million could be paid based upon the achievement of
certain future financial results.
Also during 1997, the Company recorded a charge of $10.2 million ($6.0
million after tax; $0.05 per diluted share) for purchased in-process research
and development associated primarily with the acquisition of certain assets of
Premier Solutions Ltd. This charge represents, as of the date of acquisition,
the value of software products still in development, but not considered to have
reached technological feasibility or to have any alternative future use.
During 1998 and 1997, certain businesses which the Company acquired in
1999, in pooling-of-interests transactions for which prior year financial
statements are restated, made cash payments totaling $7.1 million and $0.7
million, respectively, in connection with certain purchase transactions.
Goodwill recorded in connection with these acquisitions is $2.4 million.
The results of operations of all of these acquired businesses have been
included in the accompanying Consolidated Statements of Income from the date of
acquisition. Pro forma combined results of operations are not presented since
the results of operations as reported in the accompanying Consolidated
Statements of Income would not be materially different.
Merger Costs
During 1999, the Company recorded $99.2 million ($71.3 million pro forma after
tax; $0.55 per pro forma diluted share) for merger costs. These costs are
related to the Company's acquisitions accounted for as poolings of interests and
include a noncash compensation charge of $71.5 million ($45.0 million pro forma
after tax; $0.35 per pro forma diluted share) related to a pre-existing
employment agreement with an executive of ASC. This agreement obligated ASC to
issue to the executive 25% of the shares the Company issued in the merger. The
fair value of these shares and the related payroll costs have been recorded as
one-time non-cash costs associated with the merger. The remaining merger costs,
which generally are not tax deductible, consist principally of investment
banking, legal, accounting and printing fees.
During 1998, the Company recorded $14.6 million ($12.4 million after tax;
$0.10 per diluted share) for merger and restructuring costs. Merger costs are
associated with poolings of interests and costs associated with the expiration
of the Company's offer to acquire Rolfe & Nolan Plc. Restructuring costs
associated with the merger with Infinity are $2.7 million. Approximately $1.5
million of these costs are severance costs that were paid to twenty-seven
employees whose employment was terminated because they were in redundant
software development and administrative functions, and approximately $1.2
million of these costs are associated with the closing of duplicate office
facilities.
During 1997, the Company recorded $3.5 million ($0.03 per diluted share)
for merger costs associated with poolings of interests.
Dispositions and Extraordinary Items
On March 31, 1999, the Company sold two wholly owned HIS subsidiaries. Total
cash received in connection with the sale of the HIS businesses is $25.0
million, resulting in an after-tax gain of $10.4 million ($0.08 per diluted
share). The gain on the sale is reflected in the Consolidated Statements of
Income as an extraordinary item in accordance with the reporting requirements
for a sale of assets following a recently completed business combination that
was accounted for as a pooling of interests.
During 1999 and 1998, extraordinary gains of $0.3 million (less than $0.01
per diluted share) and $3.1 million ($0.02 per diluted share), respectively,
were recorded as a result of Oshap's early retirement of debt.
<PAGE>
Subsequent Events
On March 1, 2000, the Company paid approximately $80.6 million, subject to
certain adjustments, to acquire the assets of Global Information Systems Limited
(GIS). The acquisition, which will be accounted for as a purchase, will be part
of the Company's banking and treasury systems business, and is not expected to
have a material effect on the Company's financial condition or results of
operations.
On February 16, 2000, the Company issued 2.2 million shares of common stock
in exchange for 100% of the common stock of Microbank Software, Inc. and
converted outstanding options to buy shares of the acquired company into options
to buy 0.3 million shares of the Company's common stock. The acquisition, which
will be accounted for as a pooling of interests, will be part of the Company's
banking and treasury systems business and is not expected to have a material
effect on the Company's financial condition or results of operations.
3. Pro forma Net Income Per Common Share
The computation of the number of shares used in calculating basic and diluted
pro forma net income per common share for each of the years ended December 31
follows (in thousands):
1999 1998 1997
---------------------------
Weighted-average common shares
outstanding 126,869 120,328 115,606
Contingent shares 80 22 21
---------------------------
Total shares used for calculation of
pro forma basic net income per
common share 126,949 120,350 115,627
Employee stock options 3,234 4,935 5,000
Contingent stock options 12 170 60
---------------------------
Total shares used for calculation of
pro forma diluted net income
per common share 130,195 125,455 120,687
===========================
Common Stock Split
On August 14, 1997, the Company's board of directors authorized a two-for-one
stock split of the Company's common stock. The stock split was effective for
stockholders of record on September 2, 1997, and shares were issued on September
22, 1997. The number of shares used for purposes of calculating pro forma net
income per common share and all per-share data has been adjusted for all periods
presented to reflect the stock split.
4. Short-term Investments and Investment in Common Stock
Short-term investments and investment in common stock consist of the following
at December 31 (in thousands):
unrealized
gains
cost (losses) fair value
---------------------------------------
1999
Government obligations $ 44,079 $ (226) $ 43,853
Corporate obligations 60,458 (76) 60,382
---------------------------------------
104,537 (302) 104,235
Long-term investment
in Tecnomatix common stock(1) 15,142 34,760 49,902
---------------------------------------
$ 119,679 $ 34,458 $ 154,137
=======================================
1998
Government obligations $ 24,105 $ 2 $ 24,107
Corporate obligations 1,894 -- 1,894
---------------------------------------
$ 25,999 $ 2 $ 26,001
=======================================
(1) Prior to July 13, 1999, Oshap used the equity method of accounting.
Maturities of short-term investments consisted of the following at December
31, 1999 (in thousands):
cost fair value
--------------------------
Due within one year $ 47,874 $ 47,875
Due in one year through three years
(average maturity 1.8 years) 56,663 56,360
--------------------------
$104,537 $104,235
==========================
5. Property and Equipment
Property and equipment consist of the following at December 31 (in thousands):
1999 1998
-----------------------
Computer and telecommunications equipment $ 327,544 $ 283,476
Leasehold improvements 80,894 59,996
Office furniture and equipment 60,735 52,574
Buildings and improvements 26,152 16,505
Land 3,059 1,740
Construction in progress 2,703 2,263
-----------------------
501,087 416,554
Accumulated depreciation and amortization (318,405) (267,220)
-----------------------
$ 182,682 $ 149,334
=======================
6. Long-Term Debt
Long-term debt consists of the following at December 31 (in thousands):
1999 1998
--------------------
Bank debt (interest rates ranging from 6% to 8%) $ 3,489 $ 16,366
Purchase price obligations due former owners of
acquired businesses 4,478 3,475
Other, primarily capital lease obligations for
computer equipment and buildings 5,305 7,317
--------------------
13,272 27,158
Current maturities (7,755) (17,310)
--------------------
$ 5,517 $ 9,848
====================
The Company has an unsecured revolving credit agreement (Credit Agreement)
that provides for up to $150.0 million of borrowings for the period ending
August 2003. The Company may borrow at LIBOR plus a margin, depending upon
certain financial ratios at the time of the borrowing, or a base rate, generally
the Prime rate, at the Company's option. In order to remain eligible to borrow
under the Credit Agreement, the Company must, among other requirements, maintain
a defined minimum net worth and fixed-charge coverage ratio and limit its total
debt. There were no borrowings under the Credit Agreement during 1999 or 1998.
Annual maturities of long-term debt during the next five years are as
follows (in millions): 2000--$7.8; 2001--$2.8; 2002--$1.2; 2003--$0.1; and
2004--$0.1.
7. Stock Option and Award Plans
Employee Stock Purchase Plans
Under the Company's Employee Stock Purchase Plans, a maximum of 4.4 million
shares of common stock may be issued to substantially all employees. Eligible
employees may purchase a limited number of shares of common stock each quarter
through payroll deductions. Beginning January 1, 1999, the purchase price is
equal to 85% of the lower of the closing price of the Company's common stock on
the first business day or the last business day of each calendar quarter. During
1999, 1998 and 1997, employees purchased 0.5 million, 0.4 million and 0.4
million shares, respectively, at average purchase prices of $25.11, $30.95 and
$20.02 per share, respectively. At December 31, 1999, 0.9 million shares of
common stock were reserved for issuance under these plans.
Equity Incentive Plans
Under the Company's 1994, 1996 and 1998 Equity Incentive Plans, awards or
options to purchase up to 10.4 million shares of common stock may be granted to
key employees of the Company, with an individual limit of up to 0.4 million
shares per participant per year. Options may be either incentive stock options
or nonqualified stock options, and the option price generally must be at least
equal to the fair value of the Company's common stock on the date of award or
grant. Generally, options are granted for a ten-year term and become fully
exercisable one year from the date of grant, subject to a four- or five-year
vesting schedule.
During 1999 and 1998, performance accelerated stock options (PASOs) were
awarded for an aggregate of 1.3 million and 0.8 million shares, respectively.
PASOs are nonqualified options that are granted annually near the beginning of a
three-year performance period at an exercise price equal to the fair value of
the Company's common stock on the date of grant, with a term of ten years
beginning on the date of grant. Shares vest under PASOs nine and one-half years
after the date of grant, except that vesting may be fully or partially
accelerated at the end of the third year if certain financial performance goals
are met over the three-year period. If the goals are surpassed, then cash
bonuses will become payable upon completion of the three-year period.
During 1997, long-term incentive plan awards (LTIP awards) were granted for
future options of up to an aggregate of 0.4 million shares. The actual number of
shares issued and the exercise price per share were contingent upon achieving
certain cumulative financial results during 1997 through 1999. For option shares
earned, the exercise price was $19.88 per share, but could be reduced to a
minimum of $0.99 per share if actual operating results during the three-year
period exceeded targeted operating results. Compensation expense, if any, was
estimated initially at the time the achievement of the cumulative financial
results
<PAGE>
became probable and was recorded over the remaining three-year period of the
LTIP award, based upon the difference between the market value and exercise
price of the shares earned. During the years ended December 31, 1998 and 1997,
compensation expense of $13.7 million and $5.8 million, respectively, was
recorded in connection with LTIP awards. During 1999, no expense was recorded in
connection with long-term incentive plans. During 1999, 1998 and 1997, 0.4
million, 0.1 million and 0.1 million options, respectively, were issued under
the 1996, 1995 and 1994 LTIP awards, at exercise prices ranging from $6.04 to
$14.27 per share.
Under the Company's 1986 Stock Option Plan, options to purchase up to 4.0
million shares of the Company's common stock were issued to officers and key
employees. These options were either incentive stock options or nonqualified
stock options, and the option price was equal to the fair value of the Company's
common stock on the date of grant. Generally, options were granted for a
ten-year term and became fully exercisable one year from the date of grant,
subject to a four- or five-year vesting schedule.
The table below summarizes transactions under these equity incentive and
stock option plans. All share and per-share amounts have been restated to
reflect the September 1997 two-for-one stock split (see Note 3 of Notes to
Consolidated Financial Statements).
The number of shares available under the 1998 Equity Incentive Plan will
increase each year by the number of option shares exercised during the previous
year under all of the Company's equity plans, subject to a maximum increase of
2% of outstanding shares as of the end of the previous year.
Restricted Stock Plans
The Company's Restricted Stock Award Plan for Outside Directors (RSAP) provides
for awards of up to 0.4 million shares of the Company's common stock. Each
outside director automatically receives an initial award of 20,000 shares of the
Company's common stock upon election to the Company's board of directors and,
upon re-election as an outside director every fifth year thereafter,
automatically receives another 20,000 shares. Shares awarded under the RSAP are
subject to certain transfer and forfeiture restrictions that lapse over a five-
year vesting period. RSAP awards for 20,000 shares were granted during 1999 and
1998 at a fair value of $31.55 and $34.44 per share, respectively. There were no
awards during 1997. For future awards, the number of shares awarded to each
outside director is reduced to 5,000 shares every five years, subject to the
same terms and restrictions. At December 31, 1999, 0.1 million shares of common
stock were reserved for issuance under this plan.
The Company's Restricted Stock Incentive Plan (RSIP) provides for awards of
up to 1.6 million shares of the Company's common stock to key management
employees. Shares awarded under the RSIP are subject to certain transfer and
forfeiture restrictions that lapse over a five-year vesting period. There have
been no awards granted since 1991. At December 31, 1999, 0.2 million shares of
common stock were reserved for issuance under this plan.
Unearned compensation expense related to the restricted stock plans is
reported as a reduction of stockholders' equity in the accompanying consolidated
financial statements. For accounting purposes, compensation expense is recorded
ratably over the five-year period during which the shares are subject to
transfer and forfeiture restrictions and is based on the market value on the
award date less the par value of the shares awarded. Compensation expense
related to these plans aggregated $0.6 million, $0.5 million and $0.4 million
for the years ended December 31, 1999, 1998 and 1997, respectively.
At December 31, 1999, 12.3 million shares of common stock were reserved for
issuance under all of the Company's equity incentive and stock option plans,
including 0.3 million shares under restricted stock plans.
Pro Forma Information
The Company applies APB Opinion No. 25 "Accounting for Stock Issued to
Employees" in accounting for its stock option and award plans. Accordingly,
compensation expense has been recorded for its LTIP, RSAP and RSIP awards, and
no expense has been recorded for its other stock-based plans. FASB Statement No.
123, "Accounting for Stock-Based Compensation" (SFAS 123), changes the method
for recognition of cost on stock option and award plans. Adoption of the cost
recognition requirements under SFAS 123 is optional; however, pro forma
information is presented in the following paragraph.
Had compensation cost for the Company's stock option and award plans been
determined based upon the fair value at the date of grant or award, as
prescribed under SFAS 123, the Company's net income and diluted net income per
share would have been reduced by approximately $15.7 million, $4.6 million and
$5.4 million ($0.12, $0.04 and $0.04 per diluted share) in 1999, 1998 and 1997,
respectively. The fair value of the options granted during 1999, 1998 and 1997
is estimated to be $15.62, $16.34 and $10.84 per share, respectively, on the
date of grant using the Black-Scholes pricing model with the following
assumptions: volatility of 51%, 38% and 36% in 1999, 1998 and 1997,
respectively; expected term of six years; risk-free interest rate of 6.60%,
5.00% and 5.75% in 1999, 1998 and 1997, respectively; and no dividend yield. The
effects of applying SFAS 123 in this pro forma disclosure are not necessarily
indicative of the impact on future years, since SFAS 123 does not apply to
grants and awards made prior to 1995, and the Company's options and awards
generally vest over five years. The Company also anticipates that additional
options and awards will be made in future years.
<PAGE>
<TABLE>
<CAPTION>
shares (in thousands)
-------------------------------------- -------------
under weighted
available under option LTIP award average price
-------------------------------------- -------------
<S> <C> <C> <C> <C>
Balances at December 31, 1996, as previously reported 2,124 8,142 932 $10.33
Adjustments in connection with poolings of interests 1,092 1,518 -- 5.28
--------------------------------------
Balances at December 31, 1996, as restated 3,216 9,660 932 9.54
Poolings of interests -- 674 -- 3.90
Authorized 123 -- -- --
LTIP award (415) -- 415 --
LTIP maturity 66 102 (168) 7.32
Canceled 446 (490) (50) 12.17
Granted (1,645) 1,645 -- 19.91
Exercised -- (1,266) -- 3.70
--------------------------------------
Balances at December 31, 1997 1,791 10,325 1,129 11.39
Poolings of interests -- 36 -- 1.28
Authorized 3,030 -- -- --
LTIP maturity 135 112 (247) 7.10
Canceled (389) (471) -- 18.97
Granted (2,785) 2,785 -- 32.44
Exercised -- (2,089) -- 7.69
--------------------------------------
Balances at December 31, 1998 1,782 10,698 882 17.18
Poolings of interests -- 354 -- 11.52
Authorized 1,898 -- -- --
LTIP maturity 104 362 (466) 9.23
Expired (559) -- -- --
Canceled 1,282 (1,282) -- 28.12
Granted (4,444) 4,444 -- 31.42
Exercised -- (3,106) -- 8.83
--------------------------------------
Balances at December 31, 1999 63 11,470 416 23.31
======================================
</TABLE>
<PAGE>
The following table summarizes information concerning outstanding and
exercisable options (in thousands) at December 31, 1999:
<TABLE>
<CAPTION>
options outstanding options exercisable
------------------------------------------------------------ ---------------------------------
weighted average
------------------------------------------ number of weighted average
range of exercise prices number of options remaining life (years) exercise price options exercise price
- ------------------------ ------------------------------------------------------------ ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
$0.34 to $5.00 743 2.1 $ 2.42 686 $ 2.88
$5.01 to $10.00 876 5.9 6.24 758 7.16
$10.01 to $20.00 2,726 5.5 15.73 2,562 15.24
$20.01 to $30.00 2,846 8.5 24.32 1,459 23.20
over $30.00 4,279 8.9 35.01 1,114 33.61
</TABLE>
8. Savings Plans
The Company and its subsidiaries maintain savings plans that cover substantially
all employees. These plans generally provide that the Company will match
employee contributions up to 4% of employee compensation, subject to certain
limitations. Total expense under these plans aggregated $13.7 million, $11.7
million and $9.1 million for the years ended December 31, 1999, 1998 and 1997,
respectively.
9. Income Taxes
The provisions for income taxes for each of the years ended December 31 consist
of the following (in thousands):
1999 1998 1997
--------------------------------
Current
Federal $ 90,836 $ 79,681 $ 57,616
State 24,756 19,405 13,364
Foreign 12,565 8,277 7,807
--------------------------------
128,157 107,363 78,787
--------------------------------
Deferred
Federal (3,847) (11,702) (13,521)
State (638) (2,115) (1,874)
Foreign (270) -- (445)
--------------------------------
(4,755) (13,817) (15,840)
--------------------------------
$123,402 $ 93,546 $ 62,947
================================
Differences between income tax expense at the U.S. federal statutory income
tax rate and the Company's effective income tax rate for each of the years ended
December 31 are as follows (in thousands):
1999 1998 1997
--------------------------------
Tax at federal statutory rate $ 72,527 $76,527 $53,118
State income taxes,
net of federal benefit 16,091 10,734 7,012
Nondeductible merger and other costs 34,714 2,267 1,234
Nondeductible intangible amortization 2,637 3,910 1,652
Tax-exempt interest income (438) (491) (235)
Foreign taxes (5,017) (244) (664)
Net operating losses 1,635 -- --
Other, net 1,253 843 830
--------------------------------
$123,402 $93,546 $62,947
================================
Effective income tax rate 59.6% 41.5% 39.9%
================================
Deferred income taxes are recorded based upon differences between financial
statement and tax bases of assets and liabilities. The following deferred income
taxes were recorded at December 31 (in thousands):
<TABLE>
<CAPTION>
1999 1998
-------------------
<S> <C> <C>
Current:
Accounts receivable $ 12,290 $ 9,549
Accrued compensation and benefits 7,137 6,016
Other accrued expenses 3,707 3,484
Deferred revenues and acquisition-related items 2,431 3,159
-------------------
Total current deferred income tax asset $ 25,565 $22,208
===================
Long-term:
Accounts receivable $ (1,763) $(2,456)
Property and equipment 10,728 8,130
Intangible assets 109,570 8,092
Net operating loss carryforwards 9,469 7,322
Long-term incentive plan 7,559 8,682
Purchased in-process research and development
and other acquisition-related items 15,904 17,075
Unrealized gain on common stock investment (12,166) --
-------------------
Total long-term deferred income tax asset 139,301 46,845
Valuation allowance (9,469) (7,519)
-------------------
Net long-term deferred income tax asset $129,832 $39,326
===================
</TABLE>
A valuation allowance for deferred income tax assets associated with net
operating-loss carryforwards has been established since the Company currently
believes it is more likely than not that the deferred income tax assets will not
be realized. Tax loss carryforwards of U.S. subsidiaries, totaling $16.2
million, expire between 2002 and 2019. Tax loss carryforwards of Israeli
subsidiaries, totaling $7.0 million, are unlimited in duration and linked to the
Israeli consumer price index. The remaining tax loss carryforwards of certain
European and Asian subsidiaries total $7.5 million and have various expiration
dates beginning in 2003.
In connection with the acquisition of ASC, the Company and the former
shareholder of ASC have agreed, for federal income tax purposes, to treat the
Company's acquisition of ASC stock as an acquisition of assets pursuant to
Section 338(h)(10) of the Internal Revenue Code of 1986. As a result, the
Company may deduct the amortization of the fair value of the intangible assets
acquired as an expense against taxable income over the next fifteen years. While
the tax deduction will reduce current income taxes payable over that fifteen-
year period, it will not reduce the Company's overall effective income tax rate
since it arose in connection with a pooling-of-interests transaction, and
generally accepted accounting principles require that such benefit be credited
to capital in excess of par value. The deferred income tax asset recorded in
connection with this transaction was $103.0 million.
10. Operating Segments and Geographic Information
The Company's three operating segments consist of its investment support systems
(ISS) business, business continuity and Internet services (BCIS) business, and a
third segment referred to as Other Businesses. The Company's operating segments
are groups of businesses that offer similar products and services. The segments
are managed separately since each business requires different technology and
marketing strategies.
ISS designs, markets and maintains a comprehensive set of proprietary
software applications that are delivered to customers on license and
application-service-provider bases. The fundamental purpose of these systems is
to automate the complex transaction processing associated with investment
operations. BCIS provides customers with business continuity services and high-
availability infrastructure, enabling customers to have around-the-clock access
to business-critical information. BCIS also provides Web-hosting and co-location
services, as well as outsourcing and remote-access computer services primarily
for software developers and government agencies. Other Businesses is comprised
of a business that provides a work-flow management system, which increases
efficiency and flexibility in managing healthcare insurance organizations, and
an automated mailing-services business.
<PAGE>
The 1999, 1998 and 1997 operating results and certain asset information for each
operating segment follow (in thousands):
<TABLE>
<CAPTION>
total operating corporate and
1999 ISS BCIS Other Businesses segments other items consolidated total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $1,052,378 $357,937 $34,186 $1,444,501 $ -- $1,444,501
Depreciation and amortization 72,258 47,347 1,821 121,426 619 122,045
Operating income 189,824 94,371 5,024 289,219 (113,304)(1) 175,915
Extraordinary items, net of income taxes 299 -- 10,371 10,670 -- 10,670
Total assets 961,776 240,304 16,726 1,218,806 345,956(2) 1,564,762
Cash paid for property and equipment 39,682 54,760 1,068 95,510 319 95,829
1998
- ------------------------------------------------------------------------------------------------------------------------------------
Revenues $ 957,375 $302,540 $52,333 $1,312,248 $ -- $1,312,248
Depreciation and amortization 69,068 43,409 3,033 115,510 384 115,894
Operating income 163,249 72,064 5,296 240,609 (25,705)(1) 214,904
Extraordinary items, net of income taxes 3,074 -- -- 3,074 -- 3,074
Total assets 876,700 200,549 9,937 1,087,186 127,006(2) 1,214,192
Cash paid for property and equipment 28,641 40,023 2,517 71,181 2,072 73,253
1997
- ------------------------------------------------------------------------------------------------------------------------------------
Revenues $ 741,601 $253,544 $42,494 $1,037,639 $ -- $1,037,639
Depreciation and amortization 62,913 36,656 2,815 102,384 267 102,651
Operating income 121,893 56,458 3,076 181,427 (27,153)(1) 154,274
Total assets 749,253 174,513 6,597 930,363 43,042(2) 973,405
Cash paid for property and equipment 24,329 36,967 2,652 63,948 160 64,108
</TABLE>
(1) Includes corporate administrative expenses, merger costs associated with
poolings of interests and, in 1997, purchased in-process research and
development costs.
(2) The Company does not allocate deferred income taxes. Amount is net of
investments in subsidiaries, which are eliminated in consolidation.
The Company's revenues by customer location for each of the years ended
December 31 follow (in thousands):
1999 1998 1997
------------------------------------------
United States $1,147,521 $ 997,777 $ 791,216
------------------------------------------
International:
Europe 199,661 222,168 157,512
Asia/Pacific 51,591 45,624 42,641
Canada 20,970 19,897 21,463
Other 24,758 26,782 24,807
------------------------------------------
296,980 314,471 246,423
------------------------------------------
$1,444,501 $1,312,248 $1,037,639
==========================================
11. Commitments
The Company leases a substantial portion of its computer equipment and
facilities under operating leases. Future minimum rentals under operating leases
with initial or remaining noncancelable lease terms in excess of one year at
December 31, 1999 follow (in thousands):
2000 $ 71,350
2001 54,274
2002 35,550
2003 22,612
2004 17,249
Thereafter 33,826
--------
$234,861
========
Rent expense aggregated $87.2 million, $82.7 million and $71.1 million for
the years ended December 31, 1999, 1998 and 1997, respectively.
report of independent accountants
To The Board of Directors and Stockholders
SunGard Data Systems Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, stockholders' equity, and cash flows present
fairly, in all material respects, the financial position of SunGard Data Systems
Inc. and its subsidiaries at December 31, 1999 and 1998, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1999 in conformity with accounting principles generally
accepted in the United States. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentations. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
February 10, 2000, except as to the subsequent
events information presented in Note 2, for
which the date is March 1, 2000.
<PAGE>
Exhibit 21.1
SunGard Data Systems Inc.
Subsidiaries of the Registrant
Name of Subsidiary Jurisdiction of Incorporation
- ------------------ -----------------------------
SUNGARD DATA SYSTEMS INC....................................... DELAWARE
SUNGARD INVESTMENT VENTURES, INC.......................... DELAWARE
BANCWARE, INC.......................................... MASSACHUSETTS
BI-TECH SOFTWARE INC................................... DELAWARE
COGNISOURCE LTD........................................ DELAWARE
FDP CORP............................................... FLORIDA
EXISTENTIAL SYSTEMS, INC........................... COLORADO
FDP EUROPE LIMITED................................. SCOTLAND
FDP SOFTWARE SOUTH AFRICA (PROPRIETARY) LIMITED.... S. AFRICA
FINANCIAL DATA PLANNING CORP....................... DELAWARE
FINANCE DEVELOPMENT INC................................ DELAWARE
AUTOMATED HOLDINGS INC. (1)........................ DELAWARE
AUTOMATED SECURITIES CLEARANCE, LTD............. NEW JERSEY
AUTOMATED SECURITIES CLEARANCE (EUROPE) LTD... ENGLAND/WALES
AXIS GLOBAL LLC............................... NEW YORK
TOLL ASSOCIATES L.L.C......................... DELAWARE
MACESS CORPORATION..................................... ALABAMA
MICROBANK SOFTWARE, INC................................ DELAWARE
MB PTE LTD......................................... SINGAPORE
MICROBANK SOFTWARE CANADA INC...................... CANADA
MICROBANK SOFTWARE GmbH............................ SWITZERLAND
MICROHEDGE INC......................................... ILLINOIS
OSHAP TECHNOLOGIES LTD. (2)............................ ISRAEL
OSHAP SOFTWARE INDUSTRIES LTD...................... ISRAEL
MINORCA CORPORATION NV.......................... DUTCH ANTILLES
TP TECHNOLOGIES S.A. (3)...................... BELGIUM
DECALOG NV (4)............................. NETHERLANDS
DECALOG SOFTWARE DISTRIBUTION, INC...... DELAWARE
DECALOG GENIE INFORMATIQUE S.A.S........ FRANCE
CADEXTAN S.A.......................... FRANCE
DECALOG ISRAEL (1991) LTD............. ISRAEL
DECALOG INC........................... MASSACHUSETTS
DECALOG (U.K.) LTD.................... ENGLAND/WALES
MINT SOFTWARE TECHNOLOGIES LTD. (5)........ ISRAEL
AFIC TECHNOLOGIES (YARGA) LTD........... ISRAEL
AFIC TECHNOLOGIES INC................. MASSACHUSETTS
MANOF SYSTEMS EUROPE SA................. BELGIUM
MINT COMMUNICATION SYSTEMS INC.......... DELAWARE
MINT COMMUNICATION SYSTEMS LTD.......... ENGLAND/WALES
MINT SOFTWARE TECHNOLOGIES LTD.......... SINGAPORE
MINT SYSTEMS AG......................... SWITZERLAND
MINT TECHNOLOGIES GmbH.................. GERMANY
PEAK 1 RESOURCES, INC.................................. COLORADO
PENTAMATION ENTERPRISES, INC........................... PENNSYLVANIA
MANAGEMENT AND COMPUTER SERVICES INCORPORATED....... PENNSYLVANIA
<PAGE>
Name of Subsidiary Jurisdiction of Incorporation
- ------------------ -----------------------------
SYSTEMS ELEVEN, INC................................ CONNECTICUT
PLAID BROTHERS SOFTWARE, INC........................... CALIFORNIA
PORTFOLIO VENTURES INC................................. DELAWARE
SIS EUROPE HOLDINGS INC................................ DELAWARE
SUNGARD FINANCE S.A.S. (6)......................... FRANCE
SUNGARD INVESTMENT SYSTEMS S.A..................... SWITZERLAND
SUNGARD SYSTEMS LUXEMBOURG S.A..................... LUXEMBOURG
SSI 2 INC.............................................. DELAWARE
STERLING WENTWORTH CORPORATION......................... UTAH
SUNGARD ASSET MANAGEMENT SYSTEMS INC................... DELAWARE
WORLD SYSTEMS INC.................................. DELAWARE
SUNGARD BSR INC........................................ DELAWARE
SUNGARD BUSINESS SYSTEMS INC........................... DELAWARE
SUNGARD CANADA HOLDINGS INC............................ DELAWARE
SUNGARD CANADA NOVA SCOTIA CORPORATION............. NOVA SCOTIA
EXCHANGE MARKET SYSTEMS E.M.S. INC. (7)......... CANADA
2732-9994 QUEBEC INC............................ QUEBEC
TRUERISK CORPORATION............................ NOVA SCOTIA
SUNGARD COMPUTER SERVICES INC.......................... PENNSYLVANIA
SUNGARD CORBEL INC..................................... CALIFORNIA
SUNGARD DIS INC........................................ DELAWARE
SUNGARD DEALING SYSTEMS (S) PTE LIMITED............ SINGAPORE
SUNGARD DEALING SYSTEMS PTY LIMITED................ AUSTRALIA
SUNGARD DEALING SYSTEMS(T) CO. LTD................. THAILAND
SUNGARD SYSTEMS MALAYSIA SDN BHD................... MALAYSIA
SUNGARD/DML INC........................................ DELAWARE
SUNGARD ENERGY SYSTEMS INC............................. DELAWARE
SUNGARD FINANCIAL SYSTEMS INC.......................... DELAWARE
SUNGARD INSURANCE SYSTEMS INC...................... DELAWARE
SUNGARD HOLDINGS LIMITED (8)........................... ENGLAND/WALES
ADS SYSTEMS U.K. LIMITED........................... ENGLAND/WALES
GMI SOFTWARE EUROPE, LIMITED....................... ENGLAND/WALES
INFINITY FINANCIAL TECHNOLOGY U.K. LTD............. ENGLAND/WALES
RENAISSANCE SOFTWARE (U.K.) LIMITED................ ENGLAND/WALES
SUNGARD INVESTMENT SYSTEMS U.K. LIMITED............ ENGLAND/WALES
LONSDALE CHETWYN HOLDINGS LIMITED............... ENGLAND/WALES
C.T. COMPUTER SERVICES LIMITED............... ENGLAND/WALES
PORTFOLIO ADMINISTRATION (CHANNEL ISLANDS) LTD.. CHANNEL ISLANDS
SUNGARD SYSTEMS LIMITED............................ ENGLAND/WALES
SUNGARD INSTITUTIONAL BROKERAGE INC.................... NEW YORK
SUNGARD INVESTMENT PRODUCTS INC........................ DELAWARE
SUNGARD INVESTMENT SYSTEMS INC......................... DELAWARE
SUNGARD NETWORK SOLUTIONS INC.......................... DELAWARE
SUNGARD PORTFOLIO SOLUTIONS INC........................ DELAWARE
SHAWDATA SERVICES CANADA, INC...................... CANADA
SHAW DATA SERVICES, LIMITED........................ ENGLAND/WALES
SUNGARD RECOVERY SERVICES INC.......................... PENNSYLVANIA
SRS DEVELOPMENT INC................................ DELAWARE
SUNGARD DEVELOPMENT CORPORATION................. DELAWARE
SUNGARD LATINOAMERICA S.A. de C.V. (9)............. MEXICO
SUNGARD RECOVERY SERVICES LTD...................... CANADA
SUNGARD/RPM CONSULTING INC............................. PENNSYLVANIA
SUNGARD SHAREHOLDER SYSTEMS INC........................ DELAWARE
<PAGE>
Name of Subsidiary Jurisdiction of Incorporation
- ------------------ -----------------------------
SUNGARD SYSTEMS INTERNATIONAL INC...................... PENNSYLVANIA
INFINITY FINANCIAL TECHNOLOGY GmbH................. GERMANY
INFINITY FINANCIAL TECHNOLOGY JAPAN KK............. JAPAN
INFINITY FINANCIAL TECHNOLOGY SARL................. FRANCE
INFINITY FINANCIAL TECHNOLOGY SINGAPORE PTE. LTD... SINGAPORE
INFINITY INTERNATIONAL SUPPORT, INC................ CALIFORNIA
INFINITY SALES CORPORATION......................... BARBADOS
JAEGER & PARTNER ASSET- & LIABILITY MANAGEMENT AG.. SWITZERLAND
SUNGARD AG......................................... SWITZERLAND
SUNGARD FRANCE S.A.R.L............................. FRANCE
SUNGARD GESELLESCHAFT m.b.H........................ AUSTRIA
SUNGARD IBERIA, S.L................................ SPAIN
SUNGARD ITALIA, S.R.L.............................. ITALY
SUNGARD MARKETS AKTIEBOLAG......................... SWEDEN
FRONT CAPITAL SYSTEMS AB........................ SWEDEN
PROSOFTIA AB.................................... SWEDEN
PROSOFTIA UNIVERSITY AB...................... SWEDEN
SUNGARD SOFTWARE, INC.............................. DELAWARE
SUNGARD SYSTEMS GmbH............................... GERMANY
SUNGARD SYSTEMS HONG KONG LIMITED.................. HONG KONG
SUNGARD SYSTEMS PTY LIMITED........................ AUSTRALIA
SUNGARD EBS ASIA PACIFIC PTY LIMITED............ AUSTRALIA
SUNGARD SUPERANNUATION PTY. LIMITED............. AUSTRALIA
SUNGARD SYSTEMS SINGAPORE PTE LIMITED.............. SINGAPORE
SUNGARD TREASURY SYSTEMS INC........................... CALIFORNIA
ADS SYSTEMS HONG KONG LIMITED...................... HONG KONG
MULTINATIONAL COMPUTER MODELS LIMITED.............. ENGLAND/WALES
SUNGARD SYSTEMS NEW ZEALAND LIMITED................ NEW ZEALAND
SUNGARD TRUST SYSTEMS INC.............................. NORTH CAROLINA
TIGER SYSTEMS, INC..................................... DELAWARE
TIGER SYSTEMS ASIA LIMITED......................... HONG KONG
TIGER SYSTEMS LTD.................................. ENGLAND/WALES
TURN DEVELOPMENT CORPORATION........................... DELAWARE
WALL STREET CONCEPTS INC............................... NEW YORK
Notes:
- -----
(1) Jointly owned by Finance Development Inc. and Turn Development Corporation.
(2) Jointly owned by SunGard Data Systems Inc. and SunGard Investment Ventures,
Inc.
(3) Jointly owned by Minorca Corporation NV and Oshap Software Industries Ltd.
(4) Jointly owned by TP Technologies S.A., Oshap Software Industries Ltd. and
SunGard Investment Ventures, Inc.
(5) Jointly owned by TP Technologies S.A., Oshap Technologies Industries Ltd.
and SunGard Investment Ventures, Inc.
(6) Jointly owned by SIS Europe Holdings Inc. and SunGard Investment Ventures,
Inc.
(7) Jointly owned by 2732-9964 Quebec Inc. and SunGard Canada Nova Scotia
Corporation.
(8) Jointly owned by SunGard Investment Ventures, Inc., SunGard Systems
International Inc. and ADS Associates, Inc.
(9) Jointly owned by SunGard Recovery Services Inc. and SRS Development Inc.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference into the Company's Registration
Statements on Form S-8 (Registration Nos. 33-6425, 33-14984, 33-33602, 33-42345,
33-69650, 33-58515, 33-64901, 333-15641, 333-39151, 333-43969, 333-46187, 333-
53793, 333-57381, 333-73159 and 333-84095) and Registration Statements on Form
S-3 (Registration Nos. 333-45541, 333-59129, 333-65831, 333-75735, 333-75737,
333-83627, 333-88545 and 333-88733), and Registration Statement on Form S-4
(Registration No. 333-82695) of our report dated February 10, 2000, except as to
subsequent events information presented in Note 2, for which the date is March
1, 2000, on our audits of the consolidated financial statements of SunGard Data
Systems Inc. and subsidiaries as of December 31, 1999 and 1998, and for each of
the years in the three year period ended December 31, 1999, which report on the
consolidated financial statements is incorporated by reference in this report on
Form 10-K.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 29, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of SunGard Data Systems Inc. as of December 31, 1999
and the consolidated statement of income for the twelve months ended December
31, 1999, both included in the Form 10-K of SunGard Data Systems Inc. for the
twelve months ended December 31, 1999 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 286,990
<SECURITIES> 104,235
<RECEIVABLES> 368,543
<ALLOWANCES> 34,141
<INVENTORY> 0
<CURRENT-ASSETS> 786,807
<PP&E> 501,087
<DEPRECIATION> 318,405
<TOTAL-ASSETS> 1,564,762
<CURRENT-LIABILITIES> 348,478
<BONDS> 5,517
0
0
<COMMON> 1,285
<OTHER-SE> 1,209,482
<TOTAL-LIABILITY-AND-EQUITY> 1,564,762
<SALES> 0
<TOTAL-REVENUES> 1,444,501
<CGS> 0
<TOTAL-COSTS> 858,572<F1>
<OTHER-EXPENSES> 99,184<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,321
<INCOME-PRETAX> 190,456
<INCOME-TAX> 117,306
<INCOME-CONTINUING> 100,531<F3>
<DISCONTINUED> 0
<EXTRAORDINARY> 10,670<F4>
<CHANGES> 0
<NET-INCOME> 111,201<F3>
<EPS-BASIC> 0.88<F5>
<EPS-DILUTED> 0.85<F5>
<FN>
<F1>Excludes selling, marketing and administration costs, and merger costs.
<F2>Merger costs.
<F3>Represents pro forma net income due to pro forma income taxes resulting from
a pooling of interests with a Subchapter S corporation.
<F4>After-tax gains on sale of two subsidiaries and debt extinguishment.
<F5>Includes merger costs totaling $0.56 per pro forma basic share and $0.55 per
pro forma diluted share, and extraordinary gains on sale of two subsidiaries
and debt extinguishment totaling $0.08 per pro forma share.
</FN>
</TABLE>
